Case-Shiller: Seattle-Area Home Prices Surged In February

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to February data that was released this morning, Seattle-area home prices were:

Up 1.9 percent January to February
Up 12.2 percent year-over-year.
Up 10.0 percent from the July 2007 peak

Over the same period a year earlier prices were up 1.1 percent month-over-month and year-over-year prices were up 10.7 percent.

Seattle home prices as measured by Case-Shiller shot up yet again to a new all-time high in February.

Here’s a Tableau Public interactive graph of the year-over-year change for all twenty Case-Shiller-tracked cities. Check and un-check the boxes on the right to modify which cities are showing:

Seattle’s rank for month-over-month changes jumped up from #3 in January to a strong #1 in February.

Case-Shiller HPI: Month-to-Month

Hit the jump for the rest of our monthly Case-Shiller charts, including the interactive chart of raw index data for all 20 metro areas.

Seattle’s year-over-year price growth edged up once again from January to February, hitting its highest point since February 2014. Yet again in February, none of the twenty Case-Shiller-tracked metro areas gained more year-over-year than Seattle. From February through August of last year, Portland had been in the #1 slot above Seattle.

Don’t worry, the Northwest will always and forever continue to be literally the envy of other states.

Seven cities hit new all-time highs again in February: San Francisco, Denver, Boston, Charlotte, Portland, Dallas, and Seattle.

Here’s the interactive chart of the raw HPI for all twenty metro areas through February.

Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve metro areas whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.

Case-Shiller HPI: Decline From Peak

In the 115 months since the price peak in Seattle prices are up 10.0 percent.

Lastly, let’s see how Seattle’s current prices compare to the previous bubble inflation and subsequent burst. Note that this chart does not adjust for inflation.

Case-Shiller: Seattle Home Price Index

Check back tomorrow for our monthly look at Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 2017-04-25)

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

299 comments:

  1. 1
    ess says:

    Any correlation between Seattle’s sudden uptick in prices and Toronto’s decision to impose a tax on certain real estate transactions by foreigners? Or is it just generally too many buyers chasing too few houses?

  2. 2

    Seattle Had a Severe Shortage of Land in 1980 for Building Due to Congested Freeways and Zoned Access to Freeways

    With 2-3 times the population today…..LOL…if you work and they pave I-5 [they are] welcome to the Seattle parking lot.

    If you don’t work [half of us don’t], you can drive freeways 10A-1P and laugh at the workers getting up at 5AM for work at 8AM. But housing is scarce, it always was for the last 40-45 years too.

  3. 3

    Here’s a story where HUD considers a family of four in San Francisco with over $100,000 of income to be low income! $68,500 is very low.

    http://www.sfgate.com/bayarea/article/Bay-Area-low-income-105k-hud-11094978.php

    Warning, the site does have a video element to it.

  4. 4
    js says:

    By ess @ 1:

    …Or is it just generally too many buyers chasing too few houses?

    More like too many landlords.

    In my opinion, landlording is a slimy way to make money. There is no good reason why anyone needs to own more than one house. It would great if the politicians pass a huge, prohibitive tax on non-owner occupied houses. Maybe like the capital gains tax — if you haven’t lived there in 2 years, you pay big time.

    In Hawaii, property tax is about double for landlords. Maybe Seattle should do the same.

  5. 5

    RE: Kary L. Krismer @ 3
    Fake News Down Plays Dwindling Middle Income [Middle Class??? LOL] Woes

    As Racist Fascism? LOL….try irregardless of legal citizen ethnic group….we all want good jobs to go to our children. Fascism thinks the opposite, give away our prosperity to foreigners and use xenophobic lies to describe African American, White Caucasian and Latino, etc legal citizens who just want more jobs and pay for folks over 50 and under 30….the 100M legal citizen Americans that have given up looking for a livable and drivable employment due to low wage NWO overpopulation and our congested/crumbling infrastructure with current organized crime health care lies.

  6. 6
    jon says:

    By js @ 4:

    In Hawaii, property tax is about double for landlords. Maybe Seattle should do the same.

    A tax that unintentionally targets renters. That sounds exactly like something that Seattle would do.

    Not everyone needs to go through the expense of buying and selling a house.

  7. 7

    RE: js @ 4
    Home Ownership Should Never Be So Difficult

    To disallow most of the Middle Income [Middle Class??? LOL] access to affordable home purchases for your families, just because your income is normal average. Totally unAmerican and this is Fascism, evil Fascism. Renting forever also means FAR LESS old money in the near future [as Baby Boomers retire or die off] to keep Seattle’s lucky rich kids in the green.

    Home ownership has replaced retirement savings….a horrifying cashless future with 2nd mortgages extending well beyond the grave…yes, strapped bankrupt Seattle Baby Boomers are moving in with the X-Gens children as they get disabled or forced into Social Security smelly nursing homes [with their dinky unplanned retirements]….its not just Milenials moving in with Baby Boomers anymore.

  8. 8

    RE: jon @ 6
    My Home Insurance is Double as a Landlord for My Daughter [$0 Rent BTW]

    But at least the money is being wasted on a dead horse, rent. Her home becomes an emergency asset for my family too, and the $600/mo rent in Kansas City= Her $26K foreclosure 3 BDRM in just 3 years. In Seattle the $1800/mo rent would pay back $26K in about 1 year…

    Kansas attacks landlords in other ways….no blood family in the rental= inside home inspections to likely bankrupt an out-of-state landlord. Seattle should do this too, not just to elderly in Reverse Mortgages.

  9. 9
    NotHouseForYou says:

    By js @ 4:

    By ess @ 1:
    In my opinion, landlording is a slimy way to make money. There is no good reason why anyone needs to own more than one house.

    So, just to be clear, you are saying that it is OK for there to be apartments available for people to rent, but that there should not be houses available for people to rent?

    That’s pretty dam discriminatory. When I was just out of college 3 of us got together to rent a decent house with a yard rather than live in tiny little apartments. Way nicer environment while we all saved for the next step and I was more than happy to pay our rent to that landlord than a corporate apartment company…

  10. 10

    RE: NotHouseForYou @ 9

    I just returned from vacation in San Diego and was appalled to see signs on people’s lawns that said “Neighborhoods are for NEIGHBORS! NOT vacation RENTERS!” I was staying in a Hotel at the Ocean, but walking around looking at homes as I’m prone to do. I immediately felt like I wasn’t even allowed to walk down the street! Pretty creepy signs.

    A grass-roots organization and apparently the City itself, and not an HOA or local group, is thinking to or even has already banned the use of beach area private residences as vacation rentals.

    http://savesandiegoneighborhoods.org/

  11. 11
    justme says:

    RE: ess @ 1RE: ess @ 1

    Another aw shucks post from Ess, the king of reverse concern trolling.

    >>Or is it just generally too many buyers chasing too few houses?

    No, there is just too many foaming-at-the-mouth greedbag petit rentiers posting on this blog. And too many Yellen dollars (Yellen bucks) looking for a place to die.

  12. 12
    Macro Investor says:

    The median price has flattened out in April. Still in an uptrend, but pausing. Just looking at the chart on Tim’s home page.

    All measures have flaws. Case-shiller is old news by the time the public gets it. I’m guessing paid subscribers get more recent data.

  13. 13
    GoHawks says:

    Out of the last 24 months, how many times has Seattle been in 1st or 2nd position?

  14. 14
    Blurtman says:

    RE: Ardell DellaLoggia @ 10 – San Diegans’ brains are fried from too much sun. Plus, they drink recycled pee water.

  15. 15
    js says:

    By NotHouseForYou @ 9:

    By js @ 4:

    By ess @ 1:
    In my opinion, landlording is a slimy way to make money. There is no good reason why anyone needs to own more than one house.

    So, just to be clear, you are saying that it is OK for there to be apartments available for people to rent, but that there should not be houses available for people to rent?

    Not at all what I am saying.

    What I suggested was that people who are using housing as an “investment” should pay higher property taxes. This would weed out the “speculator” landlords like Erik and Ray that are hugely leveraged and expect the government to bail them out on the next crash. It would also make corporate landlording less profitable. Lifers like ESS would be fine.

  16. 16
    Macro Investor says:

    So case-shiller is now up 10% from the 2007 peak. That means after 10 years a buyer near the peak would finally be break even.

    That assumes an average house over a wide region and a 10% cost of selling. Trendy hoods declined less and rose faster than far out burbs.

  17. 17
    Doug says:

    Whoa — Seattle leading the nation in monthly gains. Almost as if there is something special about our little city. I wonder if it’s just complete coincidence that the 2 richest men in the world live here too.

  18. 18
    Eastsider says:

    RE: Doug @ 17 – I am sure many recent transplants will be returning to their former homes after experiencing Seattle rains first hand. LOL.

  19. 19
    JWS says:

    RE: Ardell DellaLoggia @ 10

    Yes, this seems to be a trend in Southern California and other popular vacation spots around the country. Santa Monica banned short term rentals last year and recently Del Mar (just north of San Diego) banned them in residential areas.

    Seems there is a fair amount of risk now for anyone thinking of buying a property for short term rentals.

  20. 20
    Andy says:

    As Seattle joins the ranks of the cities with the highest peaks -LA, SF and San Diego, those cities also had the biggest losses after 08.

    I’d like to see a graph of Total Change Prior to Low for 08-11. Essentially the reverse of the Total change since peak. “Prices will never be this low again” was only true up until Jan 2005. For 6 years after that it was false. I think we’ve again crossed that line and now is the time to sit tight and wait for a correction. Don’t add to the frenzy unless you have to.

  21. 21

    RE: JWS @ 19

    Seems odd to me near the Ocean as The Jersey Shore has been primarily houses as short term rentals for…since forever. But then the area near the beach there has fewer people who live there year round.

    My Jewish (vs Italian) grandparents lived in Atlantic City and I don’t recall anyone ever complaining about vacation rentals. There were many more of those than year round residents. Some people spent the whole summer in the houses and left them vacant the rest of the year. But not many owned them as primary residences.

    I fully understand Condo HOA boards making rules against quick turn vacation rentals…but a City? Seems odd. Almost unconstitutional as to the “bundle of rights” that comes with property ownership.

  22. 22

    [This post pertains to NWMLS statistics.]

    By Macro Investor @ 12:

    The median price has flattened out in April. Still in an uptrend, but pausing. Just looking at the chart on Tim’s home page.

    Assuming you’re looking at the Altos charts I wouldn’t read too much into that. First, it’s Seattle, not the King County number we usually deal with. Second, it seems to be some sort of a moving number, not a number for a particular month, like we usually deal with. Third, a lot of sales come in at the end of the month, and that can really cause the numbers to jump around. Finally, even if it were flat for April, one month doesn’t indicate a trend.

    As of right now it looks like the King County median will jump up considerably from the March number, but as noted that can change a lot. Also, my method of looking at the numbers doesn’t try to account for late reported sales, because that takes a bit more time and isn’t worth the effort.

    Reference to direction of median from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

  23. 23
    Blurtman says:

    I told ya’s. This beauty had its first open house over the weekend. It is SOLD! Two days. $Ka-ching$.

    I would have asked $925,000. Interesting to see what they did sell it for.

    Red. Hot. Market.

    305 211th Pl SE,
    Sammamish, WA 98074
    4 beds 3 baths 3,070 sqft

    FOR SALE
    $875,000

    https://www.zillow.com/homes/305-211th-Pl-SE,-Sammamish,-WA-98074_rb/

  24. 24
    Kmac says:

    By Eastsider @ 18:

    – I am sure many recent transplants will be returning to their former homes after experiencing Seattle rains first hand. LOL.

    One can only hope so…..

  25. 25
    ess says:

    By Blurtman @ 23:

    I told ya’s. This beauty had its first open house over the weekend. It is SOLD! Two days. $Ka-ching$.

    I would have asked $925,000. Interesting to see what they did sell it for.

    Red. Hot. Market.

    305 211th Pl SE,
    Sammamish, WA 98074
    4 beds 3 baths 3,070 sqft

    FOR SALE
    $875,000

    https://www.zillow.com/homes/305-211th-Pl-SE,-Sammamish,-WA-98074_rb/

    To view a “red hot” market in all its glory, review recent houses that have sold in trendy neighborhoods, for example, north of the Mountlake Cut. Many of those houses are selling and closing within 30-45 days, often at hundreds of thousands of dollars over the asking price. There is a great deal of money and optimism in the Seattle area. One assumes that this will affect both the price of housing in less desirable areas, as the losers in multiple bidding situations, as well as buyers priced out of the market compete to purchase real estate in other areas. In addition, if prices don’t suffer a dramatic reversal, there will be a permanent renter class that will demand even more types of rent control lite (such as recently enacted by Seattle City Council), or spend time blaming landlords and developers for their own economic plight as rents increase as a reflection of the cost of housing. The problem is, neither approach will do anything to solve the immediate or longer term problem of “affordable housing”, which is rapidly disappearing in most of Seattle and adjacent areas. It just may be that much of Seattle will never be “affordable” again.

    That lack of “affordable housing” shortages is caused both by natural boundaries as present in the Seattle area, as well as artificial constraints such as the Urban Growth Management Act, as well as other regulations that drive up the cost of both raw land and subsequent development. Any reduction in prices (which are inevitable) should be temporary at best.

    BTW – new tariffs on Canadian timber which makes large part of the new housing market. That won’t do anything to lower the price of new housing.

    To paraphrase that famous character Pogo Possum – we have met the cause of dramatically increased price of housing, and to a large extent, it is us.

  26. 26
    Macro Investor says:

    By ess @ 25:
    there will be a permanent renter class

    There will be a permanent DEBT SLAVE class. Fixed it.

  27. 27
    Cap''n says:

    RE: ess @ 25

    If trump gets a 15% corporate tax rate and makes some other tweaks to the law, we will also see a huge influx of cash from overseas. All the fed injected cash will rear its head and inflation will likely take a serious run. That 4% interest on 30 year debt will be looking fantastic.

  28. 28
  29. 29
    Ross says:

    By js @ 4:

    By ess @ 1:

    …Or is it just generally too many buyers chasing too few houses?

    More like too many landlords.

    In my opinion, landlording is a slimy way to make money. There is no good reason why anyone needs to own more than one house. It would great if the politicians pass a huge, prohibitive tax on non-owner occupied houses. Maybe like the capital gains tax — if you haven’t lived there in 2 years, you pay big time.

    In Hawaii, property tax is about double for landlords. Maybe Seattle should do the same.

    So everyone should buy a home? If you accept that there is a demand for renting properties, then landlords are fulfilling a market need, and providing for the demand of renters. That seems like a reasonable and even honorable thing.

  30. 30

    RE: Ardell DellaLoggia @ 21 – [Topic Short Term Rentals]

    Part of the difference is probably just that they are used to short term rentals in that area. Apps like AirBNB are bringing this activity to new areas, so the complaints would be somewhat similar to how new noise complaints arise when they change landing patterns around airports. Also some users of these services tend to be for party situations, which also might be more accepted in an area near a beach that has historically had that sort of activity.

    But it’s also a zoning issue. You basically get hotel-like businesses operating in residential neighborhoods. As you probably know, Seattle is probably one of the most friendly cities for home-business situations, but one of the factors they do look at is effect on neighbors. Anyway, Seattle has been looking at the situation for over a year.

    http://www.seattletimes.com/seattle-news/politics/seattle-to-relook-at-rules-for-airbnb-other-short-term-rentals/

  31. 31

    [Topic Short Term Rentals]

    Here is a link to Seattle’s rules on home businesses–but note it doesn’t cover Bed and Breakfast operations, and it does require that the owner live there.

    The deliveries only once a week seems a bit out of date in the era of Amazon.

    http://www.seattle.gov/dpd/codesrules/commonquestions/homebusiness/default.htm

    One more thing on the topic–these sharing economy situations may present issues with your insurance company, specifically denial of coverage.

  32. 32
    QA Observer says:

    I think capital movement from REIT as a result of fiduciary rules has finally begun. Trend is down by 47%. Perhaps this could be a soft signal of a future RE selloff?

    https://www.bisnow.com/national/news/capital-markets/non-traded-reits-raised-only-48b-in-equity-last-year-73619?

  33. 33
    Blurtman says:

    RE: ess @ 25 – There is probably always a permanent renter class, but transit out of this class is possible as renters advance in their careers. Wonder if the average dwell time is increasing?

  34. 34
    js says:

    By Blurtman @ 31: Perhaps this wonderful new government program will help the youngsters make a quicker transition from the renter class to the debt slave class:

    http://www.housingwire.com/articles/39948-fannie-mae-announces-new-programs-to-break-through-student-loan-roadblock

  35. 35
    Blurtman says:

    RE: js @ 34 – Unbelievable! The language is Orwelllian.

  36. 36

    [Topic Renter Class/Debt Slaves]

    RE: Macro Investor @ 26RE: Blurtman @ 33RE: js @ 34 – There are some people who have no desire to buy, regardless of their ability, similar to how some people will lease cars even though they could purchase them outright. And there obviously is an economic class that will never be able to buy a home. Not ideal, because they don’t have a choice, but there are bigger problems in the world (like maybe their ability to buy food and medical care).

    As to the debt slaves, I think some of you are expecting way too much of the average person if you expect them to act in a financially responsible way. In my days as a bankruptcy attorney the bigger sources of problem issues were car loans, credit cards and medical expenses. Of course real estate prices were much lower then. The biggest real estate debt issue was most often related to credit card use. The debtor would run up credit card debt and then refinance their house to pay off the credit card debt, then they would repeat the cycle until things fell apart. With rising prices we may again start seeing that type of behavior.

  37. 37
    wreckingbull says:

    While I don’t really have much of an opinion on VRBO and AirBNB, I do understand some of the backlash. People purchased in a home in an area zoned residential. Now a hotel has opened next door. It often quite loud with partying and people coming and going, because face it – people use these properties for vacation. Should an auto chop-shop, also loud, be allowed to open across the street? To me, it is a zoning issue.

  38. 38

    [Topic Debt Slaves/Fannie Mae Student Loan Issues]

    By Blurtman @ 35:

    RE: js @ 34 – Unbelievable! The language is Orwelllian.

    How so? I’m not seeing anything Orwellian about that.

    It seems to have three components.

    The first allows refinance of “high interest student loans” into mortgage debt. I didn’t know that their were high interest student loans, but if there are such things it would probably be a good thing to allow people to do this. For one thing, student loan debt is generally non-dischargeable in bankruptcy. Even if the interest rate were slightly higher it might be a good idea to refinance just for that reason.

    The second part deals with loans paid by third parties. Not sure why this is limited to student loans, and it sounds like it isn’t. The question would be how long is that third party going to be willing and able to make those payments? Presumably they have policies that somehow look at that, but again not specifically a student loan issue.

    The third part sounds like there may be an issue getting loan information out of the student loan processors–that there’s a systemic issue. They are allowing lenders to rely on what is reported on credit reports. I don’t know enough about student loans to know how that might create a problem. Do some bump up in payment at a certain point? That probably wouldn’t show up on a credit report, but otherwise I’m not seeing an issue.

  39. 39
    ess says:

    By Blurtman @ 33:

    RE: ess @ 25 – There is probably always a permanent renter class, but transit out of this class is possible as renters advance in their careers. Wonder if the average dwell time is increasing?

    Nothing wrong with renting – but it is of concern for those who wish to purchase a home and are unable to do so. Society loses also – insofar as it has been my experience that renters understandably don’t have the same local community concerns as homeowners. Politicians have capitalized on this lack of concern by raising taxes through promoting initiatives that increase real estate taxes. Renters are finally understanding that there is a direct correlation between rising real estate taxes and their rents, and thus hopefully will pay more attention in the future, either by not voting for every initiative that is presented to them, or at least voting at all. Turn out for these issues, especially in the smaller communities around Seattle is very low. and many tax increases are passed by a very small percentage of the community. Personally I think ST3, while not a watershed event, certainly was a wakeup call to many, including renters.

    I would guess that renters in other jurisdictions are able to transition into their own homes faster than in the immediate Seattle area if they so desire. This is a very expensive area, where incomes have not kept up with housing prices. It isn’t this crazy in many other parts of the US.

  40. 40
    ess says:

    Kary @36

    As to the debt slaves, I think some of you are expecting way too much of the average person if you expect them to act in a financially responsible way. In my days as a bankruptcy attorney the bigger sources of problem issues were car loans, credit cards and medical expenses. Of course real estate prices were much lower then. The biggest real estate debt issue was most often related to credit card use. The debtor would run up credit card debt and then refinance their house to pay off the credit card debt, then they would repeat the cycle until things fell apart. With rising prices we may again start seeing that type of behavior.

    —————————————————————————————————————————

    But credit cards are necessary to obtain those crucial items that we all absolutely need, for example $400 “muddy” jeans recently in the news. Talk about taking “distress” ing to a whole new level.

  41. 41
    justme says:

    TSE:HCG

    Canada’s HCG stock is down some 58% today. The Canadian bubble may finally have burst.

    https://www.bloomberg.com/news/articles/2017-04-26/home-capital-gets-c-2-billion-loan-will-miss-financial-goals

  42. 42

    RE: Ardell DellaLoggia @ 21
    Check Out the HOA Policy

    Renting it out is generally a HOA infraction without board approval.

    If this appalls the buyer, don’t sign the purchase contract in the first place or roll the dice on HOA board approval.

  43. 43

    RE: ess @ 40
    I’d Add IPhone Data Charges in Too

    My gosh the iPhone high tech has 1/2 a trillion in corporate cash stores….that says it all.

  44. 44

    RE: Kary L. Krismer @ 38
    Kary; Even Suzy Orman the Financial Guru Recommends That Parents

    Never co-sign a family member student loan….or prepare to likely pay it all now-a-days.

  45. 45

    RE: justme @ 41
    Canada Assembles My American Engineered Dodge Charger

    They are blocking milk imports from America lately…so are worried about a trade deficit border tax. As auto production dwindles with lower incomes and overpopulation clogged infrastructure…expect these Canada auto plants to close soon and move back to Detroit where the American Overlords maintain their corporate center.

    Same with companies like Toyota….the production falters and the American assembly plants go back to the Japanese Overlords that engineered it; in Japan.

  46. 46
    Kit says:

    RE: js @ 4

    But isn’t Hawaii still unaffordable? They were still paying teachers to move there last I saw. I don’t think it solved their problem. I don’t think it will solve ours either.

    As long as things are being rented out, you still have a place to live for people coming to an area. Unless the money from the extra tax goes towards a solution, it will just cost everyone (landlords and renters) more money.

    I’m more curious how a vacancy tax would play out. If no one lives or rents a place, I can see that doing harm to Seattle – maybe our rapid inflation might be too rapid for people trying to find stability. The vacancy tax might encourage more stuff on the market or put some money towards a given solution without costing landlords+ renters directly nor harming all of the migrants and immigrants coming in for work (Vancouver had to amend their foreign tax policy for workers). Sure some people will find a way around it, but we can tackle that when we get there. The question is whether it would be a net positive policy for us in the short run.

  47. 47
    ess says:

    RE: Kit @ 46

    Hint to all renters:

    Landlords will try to shift the increased taxes that are imposed onto their customers – i.e. tenants.
    Just like every other business in a free market economy does when faced with higher costs including new taxes.

  48. 48
    jon says:

    By ess @ 39:

    By Blurtman @ 33:

    RE: ess @ 25 – There is probably always a permanent renter class, but transit out of this class is possible as renters advance in their careers. Wonder if the average dwell time is increasing?

    Personally I think ST3, while not a watershed event, certainly was a wakeup call to many, including renters.

    I think ST3 is going to eventually be a big help to renters who want to move into a house by enabling longer distance commuting. Going forward, the close-in land is always going to be too expensive for the median and below to own. It will take a generation for ST3 to be ready for riders, but if we don’t start sometime it never will.

    Not voting for ST3 because it won’t benefit you directly is an example of renter mentality. It’s perfectly rational for an individual renter, but I am glad enough people saw past that to vote it in.

  49. 49

    [Topic–Basic Economics/Pricing]

    By ess @ 47:

    RE: Kit @ 46

    Hint to all renters:

    Landlords will try to shift the increased taxes that are imposed onto their customers – i.e. tenants.
    Just like every other business in a free market economy does when faced with higher costs including new taxes.

    Try is the operative word. It clearly a change in costs will make landlords more likely to look at increasing rents. But in this particular market I don’t think cost has much to do with rental rates. Pricing is based more on what the market will bear, and the professional landlords have been and will be raising rents either with or without higher expenses. In a very poor rental market the costs can’t be passed along. It’s only in a more balanced market that it’s likely to have any impact at all, and even that is questionable because over the short term higher taxes don’t decrease supply. But we’ve gone over that before.

  50. 50
    Macro Investor says:

    By justme @ 41:

    TSE:HCG

    How did you leave out the important point? Canadian lenders have been doing sub prime WITH NO DOC. Now we hear fannie is playing games to let student loans be ignored.

    It’s 2005 all over again. Smart bubble heads here knew it would just be a matter of time.

  51. 51
    justme says:

    Early indication that mortgage delinquencies are starting to increase

    “Analyzing the 2010 to 2016 vintages reveals three important trends. First, the 2016 vintage was the first year in which the serious delinquency rate[1] after 10 months was worse than the prior year.”

    http://www.corelogic.com/blog/authors/sam-khater/2017/04/is-the-credit-cycle-turning.aspx

  52. 52
    justme says:

    RE: Macro Investor @ 50

    >>Smart bubble heads here knew it would just be a matter of time.

    LOL, I agree (violently).

  53. 53

    [Topic Tax Reform/Healthcare]

    Trump’s one-page tax reform proposal is out. In the RE area it maintains the mortgage interest deduction, but doubles the standard deduction, making the MID useful for a lot fewer people–particularly since state and local taxes will no longer be deductible. Home ownership in a state like Texas would probably provide a tax benefit to very few people.

    In the healthcare area they mention an end to a deduction for employer paid healthcare. Not sure what that means, but if it means health care insurance will be included in gross income that might actually be a start to getting our healthcare system in order. But that would be a huge change–I really doubt that would ever pass–way too many people would be adversely affected.

    http://www.politico.com/story/2017/04/26/steven-mnuchin-trump-tax-cuts-237628

  54. 54
    js says:

    By Ross @ 29:

    So everyone should buy a home? If you accept that there is a demand for renting properties, then landlords are fulfilling a market need, and providing for the demand of renters. That seems like a reasonable and even honorable thing.

    Honorable my ass, they are in it for the money. The housing market is propped up by chumps trying to get rich by borrowing lots of money and rolling the dice on future appreciation. What’s to lose? Low-interest rates and the government will bail you out if the market crashes.

  55. 55
    Kit says:

    RE: ess @ 47

    That’s why I said I thought the extra landlord tax wouldn’t work. But how would a vacancy tax affect landlord/renters? If a place is vacant for say 6 months in a row or 6 months of a year, are you really a standard landlord?

  56. 56
    NotHouseForYou says:

    By js @ 54:

    Honorable my ass, they are in it for the money. The housing market is propped up by chumps trying to get rich by borrowing lots of money and rolling the dice on future appreciation. What’s to lose? Low-interest rates and the government will bail you out if the market crashes.

    And you aren’t in your job for money? And the retirement funds that buy apartment complexes aren’t in it for the returns?

    Why is being in a business for a profit so bad? Is it OK to make a profit as a contractor building an apartment building but not OK to make a profit renting it out?

  57. 57
    Eastsider says:

    RE: Macro Investor @ 50RE: justme @ 41

    While the Canadian HCG may be heading towards bankruptcy soon, our subprime credit card lenders are seeing a surge in card defaults. Smart money should watch the development closely.

    https://www.bloomberg.com/news/articles/2017-04-26/surprise-surge-in-soured-card-loans-sinks-capital-one-discover

  58. 58
    whatsmyname says:

    By js @ 54:

    Honorable my ass, they are in it for the money.

    Thank goodness you’re not doing anything for money.

    But I kid. Actually, you can avoid doing business with these dishonorable people with a little fortitude, an enjoyment of outdoor living; and a willingness for poopin’ in the garbage pile, and movin’ on every so often.

    I use this illustration to expose an even more dishonorable class. I mean housing is important, but what about food? You cannot sustain your life without food. Yet there are people who sell it – for money. These richie riches get these big expensive buildings, and just pile the food on shelves. Then they mark it up like crazy. You want some life sustaining food? You better pay up, pal. Otherwise, it just sits there. Restaurants mark it up even more. And you know how we all hate realtors and their 5% for practically nothing. Restaurants have these so called servers. They don’t even cook the food. They just carry it out. And these guys want 15-20%. OMG!

  59. 59
    ess says:

    By whatsmyname @ 58:

    By js @ 54:

    Honorable my ass, they are in it for the money.

    Thank goodness you’re not doing anything for money.

    But I kid. Actually, you can avoid doing business with these dishonorable people with a little fortitude, an enjoyment of outdoor living; and a willingness for poopin’ in the garbage pile, and movin’ on every so often.

    I use this illustration to expose an even more dishonorable class. I mean housing is important, but what about food? You cannot sustain your life without food. Yet there are people who sell it – for money. These richie riches get these big expensive buildings, and just pile the food on shelves. Then they mark it up like crazy. You want some life sustaining food? You better pay up, pal. Otherwise, it just sits there. Restaurants mark it up even more. And you know how we all hate realtors and their 5% for practically nothing. Restaurants have these so called servers. They don’t even cook the food. They just carry it out. And these guys want 15-20%. OMG!

    Or as Adam Smith, the famous Scottish economist from the 18th century stated so eloquently hundreds of years ago in his seminal work, The Wealth of Nations

    “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”

  60. 60
    ess says:

    By Kit @ 55:

    RE: ess @ 47

    That’s why I said I thought the extra landlord tax wouldn’t work. But how would a vacancy tax affect landlord/renters? If a place is vacant for say 6 months in a row or 6 months of a year, are you really a standard landlord?

    As a believer of some individual freedoms, and the so called sacred “right to choose”, if I so desire to leave my property vacant – that should be my choice. In addition, any new ordinance would by necessity require another bureaucratic layer of government officials to enforce it and lawyers to interpret and enforce the statute in various court challenges.

    Will the property owner have to file paperwork with the local authorities in order to prove that the rental property is rented? Will government employees turn into snoops to determine which houses are rented for the appropriate time and which are not? Who pays for the process to reverse mistaken evaluations? (Hint – the property owner). When I switched houses, remodeling my rental house for our own future occupancy as well as working on the former residence which was going to be turned into a rental, would I have to file paperwork to inform the authorities that it would take more than X amount of months to complete the job for both houses? Would I get a waiver, or would I have to pay a tax because some government entity has decided they didn’t like the previous lawful way I was using my property? Would any and all property owners withdrawing their property in order to remodel have to file extensive paperwork and be subject to continuous inspections? Will nosy neighbors report the unoccupied premises to the authorities of a couple who are snowbirds and residing in another part of the country during the winter months? Is it “fair” for some people to have two or more residences that are vacant part of the year when there are such shortages and such a need for housing in many parts of the country?

    And where does government intrusion on the rights of property owners end? In a world of expanding “human rights” for just about anything in a world where there are all sorts of shortages, it is only a matter of time when other private property is included in that list that the government decides how it should be allocated. Who gets to decide how any property comes under the rubric of “standard” operation. Do we get to vote on it? Our local legislative apparatus which is often inspired by political ideology (see Seattle) Will it be decided by unelected government officials via administrative rules? Or perhaps the courts? When will the erosion of property rights – a hall mark of any free society end?

    More ordinances placed upon any industry will in the long run make that product more expensive, and possibly reduce the quantity of the product as increasing number of investors decide there are easier ways to make money. What are usually viewed as good impulses have negative consequences for all involved. Exhibit A – rent control.

  61. 61
    jon says:

    The moment there is a vacancy tax, there will be an app to find people willing to say they are living in your property, and for a fee will even pick up the mail every now and then. Then there will be vacancy police.

    Since that will have not accomplished anything, the Seattle City Commissars will assign families to live in each ‘private’ property that is deemed under-utilized and thus counter-revolutionary.

  62. 62
    Cap''n says:

    RE: whatsmyname @ 58

    An eloquent rejection of capitalism. Nice to see a comrade here.

  63. 63

    [Topic: Seller Remorse/Enforceable Contracts]

    I know some of you are not at all interested in the nuts and bolts of buying/selling real estate, but I continue to hear of a lot of situations where a seller decides they do not want to sell for one reason or another. Sometimes it is just that the seller had personal reasons not to sell, but others are more typically that the seller thinks they can get a better price elsewhere, perhaps because another buyer has made a significantly higher offer.

    While there are any number of things that can make a purchase and sale contract prepared by an “incompetent agent” unenforceable, the easiest ones for the seller to win are: (1) No legal description or even an improper legal description attached; and (2) No ability to prove Form 17 was delivered. This case is slightly different facts than seller remorse, but the lack of being able to prove a legal description was attached cost a seller a $50,000 earnest money!

    https://casetext.com/case/home-realty-v-walsh

  64. 64

    RE: Kary L. Krismer @ 62 – I made a mistake above–the lack of a Form 17 allows the buyer to back out, not the seller. The lack of a proper legal can allow either party to back out.

  65. 65
    Macro Investor says:

    RE: whatsmyname @ 58

    Not clever or funny. Probably intentionally dishonest.

    Agents are a combination of clerical worker and taxi driver. Worth about $15 an hour. (A very small number are good at marketing — worth more). But they can charge high rates because there is a monopoly on the data. Break up the monopoly and it would become a low-cost service. The monopoly is allowed to price gouge because they spend heavily on lobbyists.

    3-2-1 before the CHIMP OUT. Remember who started it by lying.

  66. 66

    [Topic: HUD “Low Income” Stats]

    By Kary L. Krismer @ 3:

    Here’s a story where HUD considers a family of four in San Francisco with over $100,000 of income to be low income! $68,500 is very low.

    http://www.sfgate.com/bayarea/article/Bay-Area-low-income-105k-hud-11094978.php

    Warning, the site does have a video element to it.

    Here are the same stats for Seattle–$72,000 for a family of 4 is considered low income.

    http://www.seattlepi.com/local/article/What-s-low-income-in-Seattle-72-000-11102151.php

  67. 67

    [Topic: The value of a good real estate agent.]

    By Macro Investor @ 64:

    RE: whatsmyname @ 58

    Not clever or funny. Probably intentionally dishonest.

    Agents are a combination of clerical worker and taxi driver. Worth about $15 an hour. .

    I gave you two examples in the prior thread of why a good agent is worth more than the stereotypical 3% you like to reference (half the 6% you do mention). You never responded. The situation in the lawsuit I linked to in post 62 would be another example.

    Here’s some news for you. Agents are able to practice law in a very limited way, and held to the same standard of practice as an attorney. Rather obviously not all of them live up to that standard, but the situation is quite a bit different than what you describe. You really are not very good at understanding situations, are you? (Rhetorical question–no need to answer.)

    What’s not even worth $15 an hour is anything you do. I bet you’re enjoying the increase in minimum wage! ;-)

  68. 68
    Wb says:

    RE: Kary L. Krismer @ 36 – thank you Kary. I drank the koolaid on home buying a few times, and the last one required so much repair, I wiped out a lot of savings. Renting is much less stressful. I’d rather put my money elsewhere.

  69. 69

    [Topic: Renting vs. Buying]

    By Wb @ 68:

    RE: Kary L. Krismer @ 36 – thank you Kary. I drank the koolaid on home buying a few times, and the last one required so much repair, I wiped out a lot of savings. Renting is much less stressful. I’d rather put my money elsewhere.

    You’re welcome, but I’d also point out there are some buyers who actually enjoy working on houses, and seek them out. I had a friend that way–the house he bought was an early 20th Century house with a lot of deferred maintenance when he bought it, but he really fixed it up and enjoyed the process. Everyone is different!

  70. 70
    wreckingbull says:

    By Wb @ 68:

    RE: Kary L. Krismer @ 36 – thank you Kary. I drank the koolaid on home buying a few times, and the last one required so much repair, I wiped out a lot of savings. Renting is much less stressful. I’d rather put my money elsewhere.

    As I have mentioned before. For those of us who keep meticulous receipts, even for DIY renovation and maintenance, the cost of owning a home is rather shocking. Most people conveniently ignore this when calculating RE appreciation.

  71. 71
    Anonymous Coward says:

    By ess @ 47:

    RE: Kit @ 46

    Hint to all renters:

    Landlords will try to shift the increased taxes that are imposed onto their customers – i.e. tenants.
    Just like every other business in a free market economy does when faced with higher costs including new taxes.

    Not necessarily. They may decide to keep the rent the same and simply pay less for other costs, like maintenance. Who’s to say the carpets can’t last another 10 years? They might be covered in stains and the pile has long been compressed, but they’re still protecting the subfloors…

  72. 72
    Anonymous Coward says:

    By jon @ 48:

    I think ST3 is going to eventually be a big help to renters who want to move into a house by enabling longer distance commuting.

    Take a look at the “best case, not required by statute, but required to get the thing to pass the vote” map: http://soundtransit3.org/map#map

    Now, what undeveloped (or under developed) area is ST3 going to access which will enable longer distance commuting? I’d agree with you if we were going to put in high speed rail out to Cle Elum or even put slow speed rail out to Black Diamond and Enumclaw. But we’re spending 50B to add light rail to places like Redmond, Issaquah and Burien. Oh, yeah, that’s gonna drive down housing costs…

  73. 73

    [Topic: New Construction Defects/CO Detectors]

    The legal issues in this case involve insurance coverage, but the facts pertain to a house bought as new construction in 2006. The gas water heater was apparently installed incorrectly, causing CO issues inside the house. I’m going to assume that the buyer didn’t have the house inspected and that their CO detector didn’t have a digital readout. Either one of those things would have probably prevented the physical issues (or in the case of the CO detector shortened the duration of time before the issue was diagnosed).

    Just last week I was previewing two houses and noted that the inspector would possibly call out the gas water heater as being improperly installed on each. It’s quite a common problem in older houses where the tank has been replaced.

    http://www.courts.wa.gov/opinions/pdf/924368.pdf

  74. 74
    Blurtman says:

    RE: jon @ 61 – Next up:

    1. A low-income buyer downpayment tax. You didn’t build that house or road, so help your fellow citizens, and pony up some cash for the downpayment of their home. Yes, the city reserves the right to increase taxes to cover defaults.

    2. Spare room(s) eminent domain law: The city is given the right to take over vacant and spare rooms, and rent or sell them to the homeless and other citizens. Anything over 1500 sq. ft. for a family of 4 is fair game.

  75. 75
    js says:

    By whatsmyname @ 58:

    By js @ 54:

    Honorable my ass, they are in it for the money.

    But I kid. Actually, you can avoid doing business with these dishonorable people with a little fortitude, an enjoyment of outdoor living; and a willingness for poopin’ in the garbage pile, and movin’ on every so often.

    I use this illustration to expose an even more dishonorable class. I mean housing is important, but what about food? You cannot sustain your life without food. Yet there are people who sell it – for money. These richie riches get these big expensive buildings, and just pile the food on shelves. Then they mark it up like crazy. You want some life sustaining food? You better pay up, pal. Otherwise, it just sits there. Restaurants mark it up even more. And you know how we all hate realtors and their 5% for practically nothing. Restaurants have these so called servers. They don’t even cook the food. They just carry it out. And these guys want 15-20%. OMG!

    The big difference here is that many landlords are using government programs to borrow and invest huge amounts of money in a speculative way. And with very low risk — if the market crashes, these speculators will just hand the keys back to the banks, who are backed by the taxpayers.

    What if I went to my bank and asked them to borrow $500k to invest in the stock market? And wanted a guarantee that if the market went down, I could just hand my stocks over to them and walk away with no debt?

    In any other capitalistic venture, insolvent borrowers would wind up in bankruptcy court. But this doesn’t happen with housing, so people like Erik and Ray keep borrowing money to buy rentals with no fear of reprisal or debtor’s prison. In my opinion, this is a big part of why there is no inventory and prices are skyrocketing.

  76. 76

    RE: Kary L. Krismer @ 53
    A Border Tax Makes Much More Sense Kary

    Impact foreign deficit budget deterioration, not American livelihood. Prices will go up? Perhaps not, with wages now so low, retail sales have all but plummeted [corporate profits will have to be smaller now, but a corporate tax decrease can moot this]….you can see the lack of economic activity on a Saturday night drive in the Seattle area….where did the traffic disappear to? It was twice as bad 10 years ago.

  77. 77
    Kit says:

    RE: ess @ 60

    I was more interested in the economic and theoretical results. If the vacancy tax were up to debate, i’d be conflicted on the implications of the law, but I don’t really trust in anyone to be “fair”, including society for implementing laws to produce the desired behaviors and effects for society over the individual. I don’t equate fairness on the basis on money either, so now your argument on what is being taken away from the individual would have to bring in other factors around fairness in society. Do you make things less fair for one person to make things more “fair” for everyone else? Do you change the train track to hit the one person to save the 500 people? I don’t know and while interesting, I was still trying to figure out what would happen if the vacancy law did pass.

    The administrative costs could be covered by the tax or may be too much, but if they were covered by the tax, what would happen behaviorally for those affected?

  78. 78

    [Topic: Transportation Projects/Costs to Renters]

    By Anonymous Coward @ 71:

    By ess @ 47:

    RE: Kit @ 46

    Hint to all renters:

    Landlords will try to shift the increased taxes that are imposed onto their customers – i.e. tenants.
    Just like every other business in a free market economy does when faced with higher costs including new taxes.

    Not necessarily. They may decide to keep the rent the same and simply pay less for other costs, like maintenance. Who’s to say the carpets can’t last another 10 years? They might be covered in stains and the pile has long been compressed, but they’re still protecting the subfloors…

    Here’s one that the renters might actually pay directly. Seattle approved a local transportation levy of $970M. As a result of the projects, Seattle Public Utilities will spend an additional $247M on utility issues where the projects will be done. That is going to be passed along to SPU customers.

    http://jessejones.com/story/why-seattles-transportation-levy-could-lead-to-higher-utility-rates/

  79. 79
    Sid says:

    Amazon earnings coming up. Hopefully AMZN is above $1000 tomorrow morning.

  80. 80
    ess says:

    By Anonymous Coward @ 71:

    By ess @ 47:

    RE: Kit @ 46

    Hint to all renters:

    Landlords will try to shift the increased taxes that are imposed onto their customers – i.e. tenants.
    Just like every other business in a free market economy does when faced with higher costs including new taxes.

    Not necessarily. They may decide to keep the rent the same and simply pay less for other costs, like maintenance. Who’s to say the carpets can’t last another 10 years? They might be covered in stains and the pile has long been compressed, but they’re still protecting the subfloors…

    Yes, a landlord may wish to reduce their costs, and that may also reduce the quality of the tenants and the amount they can rent the premises for. As you can imagine, there are a host of factors that determine what to actually spend on a rental property beyond the legal and minimal requirements to maintain the premises. That discussion has transpired many times around here in deciding which upgrades would pay for themselves over the life of the improvements.

    And remember, a prospective tenant can refuse to rent an available apartment if the carpets are a mess and obtain a better deal. The relationship is still a two way street.

  81. 81
    greg says:

    RE: js @ 4

    Hawaii shamelessly targets tourists and vacation home owners. They even offer subsidized housing to those with the correct genetic make up…
    But the one i have the most is the $5 parking fee for NON residents …. I feel like we should charge them a special fees.

  82. 82
    greg says:

    RE: justme @ 11

    you make a fair point, but what is one to do?

    at some point you have stop ploughing into stocks and bonds …. and unless you have some fancy high finance skills for most of us that means looking at buying property…

    It does seem very tough on younger folk but to be fair when i was a pup i just went ahead and purchased what i could afford. My mom was scandalised by my choice of location, but one has to cut ones cloth. I was not in love with the tiny home in a rough neighborhood , but what you gonna do?

  83. 83
    ess says:

    By greg @ 82:

    RE: justme @ 11

    you make a fair point, but what is one to do?

    at some point you have stop ploughing into stocks and bonds …. and unless you have some fancy high finance skills for most of us that means looking at buying property…

    It does seem very tough on younger folk but to be fair when i was a pup i just went ahead and purchased what i could afford. My mom was scandalised by my choice of location, but one has to cut ones cloth. I was not in love with the tiny home in a rough neighborhood , but what you gonna do?

    Was that house around here? And how did you make out with the purchase of the house?
    You should be commended on your initiative. These days there are not as many “cloth cutters” as there once were. Many are demanding that not only government take care of them through programs such as rent control, but to subsidize their own mistakes, such as forgiving student debt.

  84. 84
    whatsmyname says:

    By Macro Investor @ 65:

    RE: whatsmyname @ 58

    Not clever or funny. Probably intentionally dishonest.

    Agents are a combination of clerical worker and taxi driver. Worth about $15 an hour. (A very small number are good at marketing — worth more). But they can charge high rates because there is a monopoly on the data. Break up the monopoly and it would become a low-cost service. The monopoly is allowed to price gouge because they spend heavily on lobbyists.

    3-2-1 before the CHIMP OUT. Remember who started it by lying.

    Devastating! Or it might be, if I could find a reasonable basis for your use of “dishonesty” and “lying”. Help me out here brother:

    “you can avoid doing business with these dishonorable people (reference is landlords) with a little fortitude, an enjoyment of outdoor living; and a willingness for poopin’ in the garbage pile, and movin’ on every so often.” (lie?)

    I mean housing is important, but what about food? You cannot sustain your life without food. (lie?)

    Yet there are people who sell it – for money. (lie?)

    These richie riches get these big expensive buildings, and just pile the food on shelves. Then they mark it up like crazy. (lie?)

    You want some life sustaining food? You better pay up, pal. Otherwise, it just sits there. (lie?)

    Restaurants mark it up even more. (lie?)

    And you know how we all hate realtors and their 5% for practically nothing. (lie?)

    Restaurants have these so called servers. They don’t even cook the food. (lie?)

    They just carry it out. And these guys want 15-20%. (lie?)

  85. 85
    S-Crow says:

    Anyone looking in Snohomish County for 5 acres looking SW over the Snohomish Valley and to the south with Mt. Rainier views peeking over Lords Hill? Among the most choice properties in Snohomish County on Dutch Hill.

    Enjoy:
    https://www.redfin.com/WA/Snohomish/8932-135th-Dr-SE-98290/home/2535054

  86. 86
    whatsmyname says:

    By Macro Investor @ 50:

    By justme @ 41:

    TSE:HCG

    It’s 2005 all over again. Smart bubble heads here knew it would just be a matter of time.

    You mean it’s 2005 all over again, only with much higher prices (50%+?)
    and with much lower rates (about 2%?)
    and much lower inventory (less than half?)

    No worries. Why quibble about the minutia? I am excited that it is 2005 again.
    That means only two more years of watching property prices rise by double digits.
    Only four of five years after that until the market bottoms.

    If this is truly 2005, in only six or so years, and for a brief period, I’ll be able to buy those properties for a little less than what they cost now. Unless of course, I’m waiting for the next leg down, or if I’m waiting for the inventory tsunami, or if I’m valuing renting so I’ll be ready to change states to keep working.

    But one needn’t buy at the bottom exactly. I can correct after a year. I can take another year off if the home debtor stock looks a little tatty to me. Maybe another year for things to settle down if I have to compete with a bunch of people for the few good properties out there. By then, I might be worried about Bubble 3.0. Home appreciation at that point may rely on big picture things that I don’t approve of. So I can troll my concern for the for the fools who are paying those prices. A couple years of doing that, and hey, it’ll be 2005 again.

  87. 87
    Sid says:

    It’s not 2005 nor is it 2004 or 3 or 2 or 1. It’s 2017 and trying to use historical patters to invest in stocks or real estate never works. You have to look at fundamentals. Folks waiting for a crash like in 2007-2008 will be very disappointed.

  88. 88
    whatsmyname says:

    By js @ 75:

    The big difference here is that many landlords are using government programs to borrow and invest huge amounts of money in a speculative way. And with very low risk — if the market crashes, these speculators will just hand the keys back to the banks, who are backed by the taxpayers.

    Most landlords avoid government programs.

    if I went to my bank and asked them to borrow $500k to invest in the stock market? And wanted a guarantee that if the market went down, I could just hand my stocks over to them and walk away with no debt?

    They would send you to their brokerage arm. Your brokerage can lend you money for stocks. Stocks do not generally have the longevity of RE, and the collateral is not as well protected from transfer. Underwriting is a little more stringent. They will hold and liquidate your position if the equity is disappearing. Yay, no debt.

    In any other capitalistic venture, insolvent borrowers would wind up in bankruptcy court. But this doesn’t happen with housing, so people like Erik and Ray keep borrowing money to buy rentals with no fear of reprisal or debtor’s prison. In my opinion, this is a big part of why there is no inventory and prices are skyrocketing.

    Real estate doesn’t end in bankruptcy court? Have you not heard of our President?
    Debtor’s prison? Do you live in a Dicken’s novel?

  89. 89
    justme says:

    RE: S-Crow @ 85

    Serious question: How are the geological (mudslide etc) conditions at and near that location?

  90. 90
    Cap''n says:

    RE: S-Crow @ 85

    Beautiful view. Weird house. my formal, legally binding offer, is 850k.

  91. 91
    Hugh Dominic says:

    AMZN stock up $50 per share. Gird your loins for higher RE prices.

  92. 92
    S-crow says:

    RE: justme @ 89 – This parcel is relatively level. Don’t know about the soil conditions. I’m hoping to stop by tomorrow to check out the millwork which looks exquisite. I’m a sucker for superb workmanship.

  93. 93
    GoHawks says:

    Who is wealthier this time next year, Gates or Bezos?

  94. 94
    Ryan says:

    Apologies for the off-topic post, but…

    Just to let everyone know, the phrase “chimp out” is a highly racist thing to say and you should judge the author (@84) appropriately. Disgusting.

  95. 95

    [Topic: Liability on Deed of Trust Debt, Ray, Erik]

    By whatsmyname @ 88:

    [JS]In any other capitalistic venture, insolvent borrowers would wind up in bankruptcy court. But this doesn’t happen with housing, so people like Erik and Ray keep borrowing money to buy rentals with no fear of reprisal or debtor’s prison. In my opinion, this is a big part of why there is no inventory and prices are skyrocketing.

    Real estate doesn’t end in bankruptcy court?

    Banks were taking shots at some people, pursuing judicial foreclosures of deeds of trust. From some accounts there seemed to be no pattern to it, other than perhaps the amount of the debt. They would sometimes go that route against people who had little ability to pay, or more importantly, little in the way of other assets they could recover. Probably just another sign of how poorly banks or run, or maybe a symptom of the mortgage debt being sold and bought by investors.

    As to Ray, he did file a bankruptcy, although it was dismissed because he didn’t follow through. That’s the type of thing though that sticks and will be on his record for 10 years (I believe). And he did go through a non-judicial foreclosure, although one where the bank for some reason waived the deficiency. That makes zero sense to me, so refer back to the last sentence of the prior paragraph.

    As to Erik, I would not put him in the same boat as Ray, although clearly he’s a disciple of Ray. So far based on what he’s disclosed he’s just purchased a couple of pieces of real estate in recent years (and more in prior years) with the goal of renting them out an accumulating property, at least for a period of time. No mention at all of eventually defaulting, and in fact just the opposite–his goal seems to be to want to sell at a profit down the road. Buying in the manner he does has risks, but the reward is the price. And the financing using that method of buying (assuming cash isn’t the option) is entirely different, although they still use deeds of trust, but that’s because deeds of trust benefit the lenders too.

  96. 96

    [Topic: Macro Investor, Racism.]

    By Ryan @ 93:

    Apologies for the off-topic post, but…

    Just to let everyone know, the phrase “chimp out” is a highly racist thing to say and you should judge the author (@84) appropriately. Disgusting.

    Two people posted in that thread. If you’re not going to call out Macro Investor by name you should at least post to the original post, which was 65. Given the way WordPress attributes quotes, the party using that phrase isn’t entirely clear in post 84 (nor was my quoting part of that post in post 67, but I didn’t copy the offensive language).

    What’s bizarre is I don’t even understand what would give rise to the use of that phrase, but then again not a lot of what Macro Investor says has any sense or logic.

  97. 97
    Joe says:

    RE: Sid @ 87
    You sound confident, even though you are just guessing.

  98. 98
    wreckingbull says:

    By Sid @ 87:

    You have to look at fundamentals. Folks waiting for a crash like in 2007-2008 will be very disappointed.

    The fundamentals that interest me

    – Current equity valuations
    – Federal reserve balance sheet
    – Student debt load and corresponding default rate
    – Sub-prime auto lending trends

    If you think real estate is hermetically sealed from these fundamentals, you might be the one who is disappointed. No mania->panic->crash looks alike. I will give you that.

  99. 99
    Sid says:

    By Joe @ 96:

    RE: Sid @ 87
    You sound confident, even though you are just guessing.

    I am not guessing. There will not be a 2007-2008 crash in the next few years.

  100. 100
    Blurtman says:

    Any advice on negotiating less than 6% with agents? In this low inventory environment, I assume it is quite doable. Thanks for any input you may provide.

  101. 101
    S Sounder says:

    RE: Sid @ 98

    I would agree that it’s not going to crash in the next couple of years, barring some major shock to the system. But this thing could still turn into a bubble.

    Investors take notice when an asset is increasing 10+% a year and they can borrow at 3-4%. It’s a speculators dream. And people who are buying their primary home can use the same justification as well. “Yeah it’s expensive, but it’s an investment and I’ll be able to refinance”. Momentum is a powerful force. As we saw during the last bubble, it can take a long time for fundamentals to overcome momentum.

  102. 102

    [Topic: Market outlook/Economic Fundamentals]

    By wreckingbull @ 97:

    By Sid @ 87:

    You have to look at fundamentals. Folks waiting for a crash like in 2007-2008 will be very disappointed.

    The fundamentals that interest me

    – Current equity valuations
    – Federal reserve balance sheet
    – Student debt load and corresponding default rate
    – Sub-prime auto lending trends

    If you think real estate is hermetically sealed from these fundamentals, you might be the one who is disappointed. No mania->panic->crash looks alike. I will give you that.

    Wreckingbull, I wouldn’t necessarily disagree with those items, but has there ever been a time since 1960 where there weren’t some economic factors that would cause concern?

  103. 103

    [Topic: Commissions]

    By Blurtman @ 99:

    Any advice on negotiating less than 6% with agents? In this low inventory environment, I assume it is quite doable. Thanks for any input you may provide.

    1. Sort of obvious, but ask. The answer most likely well depend on the property, and also the agent. There are some properties I wouldn’t want to list for any amount of money.

    2. Also sort of obvious, but the choice of agent can make a much bigger difference than any possible commission savings. Make sure the agent isn’t better at selling their own services than selling your property. On the buyer’s side I don’t really see any reason why a good buyer’s agent would negotiate fees other than to make sure they get a minimum amount if the listing doesn’t offer such an amount. Winning in multiple offer situations without throwing your client under the bus takes skill, and should be compensated.

    Also on the buyer’s side, just a tale of my morning, which had unusually bad results. We looked at 5 houses today and the one with the best siding was 2005 LP siding, so a number had failing siding. One had failing paint (peeling) on wood siding and the maintenance of the siding had been so bad it actually had a hole in the “wood chimney.” One had a roof on the back side that had been seriously damaged by past moss. One had obvious rodent intrusion points in the crawlspace and another into the garage. Basically a disappointing morning, but the clients won’t even see any of those houses without knowing of those issues first. Note not all agents preview property (and admittedly sometimes there simply isn’t time), so for buyers they could waste time looking at properties they would have no interest in.
    More importantly they won’t first learn of those conditions from an inspector after they are in contract. And most importantly, for those items what would affect financing, they won’t learn of those conditions after having getting into contract and paying for both an inspection and an appraisal and losing 20 days of time.

  104. 104
    Brian says:

    By Sid @ 98:

    By Joe @ 96:

    RE: Sid @ 87
    You sound confident, even though you are just guessing.

    I am not guessing. There will not be a 2007-2008 crash in the next few years.

    I notice you did not say there won’t be a crash period. Just that there won’t be a 2007-2008 crash.

  105. 105
    kenmorem says:

    RE: Blurtman @ 99

    i have talked to several agents that normally charge 6% that said they’re going down to 4% nowadays. same agent. same awesome “skillz” that kary likes to talk about. lower price.

  106. 106
    Blurtman says:

    ARE: kenmorem @ 104 – Thanks. A colleague said the same, that he negotiated 4% as well.

  107. 107
    Believeland Gutterpunk says:

    I’ve been lurking this site since it’s inception in 2005 because I was beginning to get suspicious of the frenzied run up in real estate prices following the 2003 purchase of my first and current home on North Beacon Hill. I’m tempted to call bull$#¥£ on current valuations. Every asset class has been on a tear since 2012 and the price gains have become even more absurd in the last year or so. The run up in Seattle real estate prices has been pretty amazing but prices are rising considerably in the Midwest where I’m from and when they rise there it almost always means there’s a bubble. Anyone else concerned the music will stop suddenly again as it did in ’07-08 or are things “different this time?” Just curios as I’ve been tempted to invest in the Dirty South Sound (Inner City Tacoma specifically) even though prices have skyrocketed out of control there also. I would like to believe Erik’s 18 year Real Estate cycle remarks but it seems like things are moving much faster than that these days. If prices double again or continue to rise to 2020 as incomes remain relatively stagnant It will definitely mean a return to feudalism.

  108. 108

    [Topic: Commissions]

    RE: Blurtman @ 105RE: kenmorem @ 104

    That’s rather a meaningless number. Does that mean 3% to the listing agent and 1% to the buyer’s agent? Or 1% to the listing agent and 3% to the buyer’s agent? Or something in excess of 3% to the listing agent and $500 to the buyer’s agent.

    Whenever you get one number you’re not really getting any information.

  109. 109
    S-Crow says:

    RE: Sid @ 98 – I wish I shared your confidence. Really, I hope you are correct.

    I’d like people to give the following some thought:

    1 of 2:

    I decided to do a cursory search last evening of a newer large development with closings from August of last year to present. Within that development on ONE street I found 6 of 13 homes were either 100% VA financed, FHA low down and or FHA with downpayment assistance provided by Washington State Housing Finance Commission (WSHFC); basically a defacto 100% program.

    Now, let’s imagine that those households carried NO consumer debt. No auto loans, no student loans and no credit card debt. So, for those that are curious that ratio is darn near 50% on that one street. Ok, I said, let’s do another street within said development. Ironically, 6 of 13 homes queried provided that exact same ratio. FHA low down and 100% VA financed transactions but no FHA with WSHFC.

    Let’s take that sample and give it a Mulligan and drop that ratio to 4 of 12 or 3 of 12. That’s 25% of the homes. Let’s leave out for another discussion that some of the homes financed were sold over list price probably to offset closing costs paid by the seller (artificial appreciation in it’s most classic form in my opinion).

    Continued…..

  110. 110

    [Topic: Obvious lack of knowledge by poster.]

    By kenmorem @ 104:

    <same awesome "skillz" that kary likes to talk about.

    Very doubtful, but anyone who would accept one number as an answer obviously wouldn’t know that.

    4% is sort of like asking someone what their blood pressure is and getting an answer of 100. Or asking someone how fast their car accelerates and getting an answer of 5 seconds.

  111. 111
    Erik says:

    RE: Brian @ 103
    Of course there will be a crash. It’s not a matter of if, it’s a matter of when. I plan to sell in 2024. I could be wrong, but it seems like a good time to sell. My real estate should double by then. I’ll cash it all in and retire early.

  112. 112
    S-Crow says:

    2 of 2:

    Now, let’s imagine that this is your average development providing this ratio of financing homes in King Co, Pierce Co , Snohomish Co’s, etc. Imagine this average development now in communities in California, Arizona, Utah, Colorado, Florida and so on throughout the country.

    This is the exact reason my Thesis differed dramatically from my Banker who said we were in a new “paradigm” during the last run up. I sense that same sentiment is shared a lot today. Shortly thereafter, their stock tanked and within months had to access TARP funds and then subsequently built a stand alone financial center in Everett that pissed me off like nothing else. I felt like pulling an AL Pacino in Scent of a Woman where he addresses the four snitches in that classic scene.

    It’s important to know that homes are selling. It’s good and is an economic driver. However, it’s even better to know what is buying the homes and that is the question I posed to my Banker: do you know what is buying up your developers land/plats/homes?

    Have a nice weekend.

    S-Crow

  113. 113

    [Topic Seller Financed Closing Costs]

    By S-Crow @ 107:

    Let’s leave out for another discussion that some of the homes financed were sold over list price probably to offset closing costs paid by the seller (artificial appreciation in it’s most classic form in my opinion).

    Not sure where this is, and with that much FHA financing in that area you might be right, but selling over list in most areas right now does not mean seller paid buyer financing costs. The listing data available to agents usually, but not always, discloses that. That was true several years ago, but more typically today it means multiple offers.

    Also, I wouldn’t call it artificial appreciation. That money comes from the seller’s net, and appraisers will attempt to determine if any closing costs were paid when they are using a sale as a comp.

  114. 114
    Kmac says:

    By Kary L. Krismer @ 102:

    [Topic: Commissions]

    Also on the buyer’s side, just a tale of my morning, which had unusually bad results. We looked at 5 houses today and the one with the best siding was 2005 LP siding, so a number had failing siding. One had failing paint (peeling) on wood siding and the maintenance of the siding had been so bad it actually had a hole in the “wood chimney.”

    It seems that any wood type siding that resembles the problematic “Inner Seal” brand siding, made by Louisiana Pacific Corp., gets the moniker of being “LP siding”.
    This Inner Seal siding was discontinued before 1997 and it was very prone to decay and rot, especially in the PNW.
    The same corporation, at about 1997, created a very much improved siding that looked similar to Inner Seal, but was virtually unaffected by water. It is called SmartLap siding. It is available today even.

    A house built in 2005 probably would have this if the siding looked to be a wood based composite siding.
    My experience with this product is that it seems to hold up to the weather well, but like any siding, the owner needs to perform proper maintenance/paint.
    SmartLap looks nearly identical to the Inner Seal siding from long ago, so it is a shoe in for spot repairs on the older homes.

    The only problem with it is that people still unjustly refer to it as “LP”………

    As far as fiber cement being more durable, I say hogwash.
    I have seen many fiber cement siding installations that are now crumbling away, primarily on the weather side of the house and primarily the earlier versions of it. It has problems too.

    The biggest problem in my opinion is the lack of maintenance.

    And by far, 2/3 of the water intrusion into living space calls I have been requested to repair are because of failing materials or faulty workmanship on wood framed chimney chases, especially those from the boom days of the 1990’s.

  115. 115
    Blurtman says:

    RE: Kary L. Krismer @ 106 – I always felt that the buyer should pay his/her agent. But in this hot market, with limited inventory, maybe the seller’s agent doesn’t have to work as hard, where as the buyer’s agent may. I would suggest a 2%/2% split.

  116. 116

    [Topic Siding]

    RE: Kmac @ 112 – I’m aware of the different generations but refer to both as LP due to the manufacturer, and I identify it by the pattern. I would agree that the second generation LP stuff is better, and also agree that there are problems with lots of different types, but I am not good at identifying all the different types of siding. I’ve just seen problems with a lot of different types. The 2002 LP stuff I saw today at a different house than the 2005 house was showing issues (expansion at the seams). I would also agree that maintenance is the issue. Part of the problem may be that people think it doesn’t need maintenance, and part of the problem undoubtedly is that some people are just not good at maintaining their homes.

    Also, not an LP issue, but a lot of the cement board stuff is improperly installed. The most bone-headed installation I’ve seen twice now where they nail in-between the boards apparently hoping that the head of the nail will keep both boards in place near the bottom. Much more common is nailing near the bottom corner of the board, which often cracks and splits, I’m guessing due to heat from the sun since it tends to occur only on part of the houses I’ve seen that occur on. And finally, it doesn’t help that the manufacturers’ installation instructions have seemingly changed over the years.

    Anyway, IMHO, wood remains the best siding, but it’s also the most expensive.

  117. 117
    Sid says:

    By Brian @ 103:

    By Sid @ 98:

    By Joe @ 96:

    RE: Sid @ 87
    You sound confident, even though you are just guessing.

    I am not guessing. There will not be a 2007-2008 crash in the next few years.

    I notice you did not say there won’t be a crash period. Just that there won’t be a 2007-2008 crash.

    I consider 2007-2008 a “once in a lifetime” kinda event. Massive firms like Lehman Brothers, Bear Stearns, AIG, WAMU, Merrill Lynch etc… failed. Maybe after 30-40 years when people have forgotten about it, a bubble forms again and a massive crash is repeated. It is too soon to predict another event of such magnitude. People don’t have that short memories.

  118. 118

    [Topic: Commissions]

    By Blurtman @ 113:

    RE: Kary L. Krismer @ 106 – I always felt that the buyer should pay his/her agent. But in this hot market, with limited inventory, maybe the seller’s agent doesn’t have to work as hard, where as the buyer’s agent may. I would suggest a 2%/2% split.

    You’re right that in this market a listing agent often doesn’t have to work as hard, but it does depend on the house to a great extent. Some houses need a lot of work to get them market ready. Others don’t. I once had an agent walk into one of my bankruptcy listings and tell me: “I wish my sellers would do staging like this.” I had to tell her that was just the way the people lived.

    As to buyers, you could certainly provide that the buyer pay their own commission (or maybe all but $500 of it to get around NWMLS rules), but that would adversely impact the price you get in the same way it would impact your price if you insisted that any buyer put down 23% (only borrow 77%). It would lower the number of people able to bid on your house and lower the price you’re likely to obtain. Don’t forget the way houses are listed through the various MLS systems is done to benefit sellers. Trying to change it doesn’t from the seller side doesn’t make much sense (one of the problems I had with Craig Blackmon’s new system).

    Or think about it a different way. Let’s say you list your house at $500,000, but provide in the listing that you’re not going to pay the 1.78% Real Estate Excise Tax (REET), as a couple of banks do. The buyer to buy your house would have to pay $508,900, but they cannot finance the $8,900. They are going to take that into account when making an offer on your house, and if they wouldn’t pay $508,900 on your house with the seller paying the REET they normally pay, they aren’t going to pay you $500,000 without the REET being paid. And again, you’d just be reducing the number of people who could bid on the house because they might not have that additional 1.78% to add to their down payment funds. The same would be true of not paying the buyer’s agent, but the amount and effect might be even larger.

  119. 119

    [Topic: Wood Chimneys]

    By Kmac @ 112:

    And by far, 2/3 of the water intrusion into living space calls I have been requested to repair are because of failing materials or faulty workmanship on wood framed chimney chases, especially those from the boom days of the 1990’s.

    I always say “wood chimneys” should be considered an oxymoron. At least a few of them have slanted tops so that it makes eventual water intrusion through the top less likely/severe. But they’re still problematic. I may change my mind though when my brick chimney falls down in an earthquake!

    I’ll typically point out the issues with wood chimneys to clients the first time we come across one (just as I would popcorn ceilings, etc.), and I’l advise that they plan on painting the part sticking above the gutter line twice as often as the rest of the house.

    Finally, too late to edit the siding post, but I wasn’t trying to imply I saw major issues with the 2005 LP siding house. I just said that was the best house I saw, and the only one without major siding issues.

  120. 120
    S Sounder says:

    RE: S-Crow @ 110

    That’s interesting S Crow. Anyone have any stats on how much of the mortgage market are made up of these types of loans? I was under the impression that VA, etc was a pretty small slice of the total.

  121. 121
    S Sounder says:

    Looks like FHA loans are about 15 percent of the market. Something to keep an eye on, but at least they are fixed rate loans. The big problem in 2007- 2010 was that the subprime, option arms, etc were resetting and the required payments would drastically increase.

  122. 122
    whatsmyname says:

    RE: Kary L. Krismer @ 95
    Kary, thank you for putting out that clarification. It had never occurred to me that someone might think those were my words. Anyway, thanks again.

  123. 123

    [Topic: Seattle’s Proposed Income Tax.]

    From the Seattle Times today:

    http://www.seattletimes.com/seattle-news/politics/tax-the-rich-seattle-income-tax-lets-the-richest-off-the-hook/

    What’s interesting is that the Times doesn’t consider the fact that it’s expressly against state law to be the “most vexing” problem. Typical Seattle.

    The problem they do consider the “most vexing” is that it’s based on where you live rather than where you earn the money. That almost certainly means they won’t have any withholding of this income tax, which will make payment and collection problematic. And also maybe reporting will be problematic.

    The article also mentions the number of employees required in another city with income tax, but I think that one might be a more broadly based tax, so it probably requires more employees (ignoring the problems with collection and reporting).

  124. 124
    Blurtman says:

    RE: Kary L. Krismer @ 115 – A home in the neighborhood sold two days after the first open house. Can you explain why the listing agent should receive 3% of the $900k selling price?

  125. 125

    [Topic Commissions.]

    RE: Blurtman @ 119

    First, I have now idea that they did receive 3%.

    Second, I have no idea what they needed to do to get that house ready for sale or what the issues were getting it sold.

    Third, I have no idea what they priced it at relative to value or what the offer they accepted was relative to value. What if they sold it for 10% more than what it’s really worth due to the way they marketed it? Is that worth 3%?

    Fourth, I have no idea what the offers were they received and whether they had to help advise the sellers on which of the highest offers were the most likely to close. Accepting an offer after less than 7 days on the market isn’t that great when you have to go back on the market 25 days later.

    But this does remind me of a story from years ago. Someone was very dissatisfied with their cut rate broker’s services and the inability to sell their home, so they contacted me to take over. They asked if I would be willing to consider a variable rate based on how long it took to sell. I said I would consider it, but asked whether the longer it took would the rate would go up or down? Yes time to sell is a factor, and in more balanced markets being faster is worth more.

    Finally, I will say if they allowed pre-inspections or accepted an offer without a buyer’s right to inspect, it probably wasn’t worth 3% or even 1%.

  126. 126
    wreckingbull says:

    RE: Kary L. Krismer @ 102 – Look at the variance of these fundamentals, as compared to historic norms. We are in uncharted waters. The Fed knows it (and is nervous). The banks know it (and are not nervous as they know they will be bailed out as usual). The sheeple don’t know it (as they are focused on their rising home values and Instagram accounts.)

    I don’t like it. A good time to be well-diversified.

  127. 127
    Blurtman says:

    In a hot market, why not go the FSBO route? You can hire an attorney and hire a staging company. It’s a seller’s market, so why shouldn’t the buyer pay his own agent, and, as with most purchases, also pay the 1.78% RE tax? 6% on a $900k home is a lot of moolah that may be quite unnecessary to part with.

  128. 128

    RE: Blurtman @ 127

    Better to do a small flat fee Company in the mls for maximum exposure. But I haven’t seen many of those recently. Saw more when people had less equity. You still might lose most of the offers by not being willing to provide the buyer agent fee as part of the price. Might work out better to raise the price by that small %.

  129. 129

    [Topic: FSBO]

    RE: Blurtman @ 127 – You could certainly do that better in this market than in the past, but it’s the same issue as allowing pre-inspections. And you are likely to still have to pay a buyer’s agent’s commission.

    If you’re selling you want as many people as possible to see your listing and as many of them as possible to want to make an offer on it. This is a golden time for sellers, because if they’re both good and lucky they can get well over FMV. It’s all dependent on capturing the attention of that one right buyer who hopefully is desperate and able to perform at the price they offer. But even if they don’t get lucky, they’ll still get at the high end of FMV if their selling methods are good.

    This discussion reminds me a bit of those people who focus too much on list price to set the price they are willing to pay. You’re focusing too much on costs of sale and not the result. That said the stereotypical 6% commission is not going to guarantee you good results. There are a lot of bad agents who charge that amount. Conversely, paying less isn’t going to mean necessarily a bad result. But the point is, the commission isn’t the biggest factor in determining your net recovery when the price can vary more than the commission amount.

  130. 130
    Blurtman says:

    RE: Kary L. Krismer @ 129 – So let’s look at arbitrage. Two folks selling similar homes, one uses an agent, one goes FSBO. Comps put both homes at $900k. The seller using the agent pockets $900k-$54k – additional transfer taxes, staging costs, etc. One can wonder without agents if the real price would be $846k. The FSBO seller pockets $900k-additonal transfer taxes, staging costs, etc. You can argue that the FSBO seller will receive less exposure, but considering technology today, there may be workarounds to market the home. I understand that someone will need to pay the buyer’s agent, I just don’t understand why the convention is that the seller pays. If someone is buying a $900k home, they can afford to pay an additional $27k.

  131. 131
    justme says:

    RE: Blurtman @ 130

    >>If someone is buying a $900k home, they can afford to pay an additional $27k.

    OR: If someone is SELLING a $900k home, they can afford to pay an additional $27k?

    :)

  132. 132
    Blurtman says:

    RE: justme @ 131 – The seller will presumably be paying their agent $27k. Perhaps both seller and buyer could afford to each pay $27k to their respective agents.

  133. 133
    Brian says:

    By Blurtman @ 132:

    RE: justme @ 131 – The seller will presumably be paying their agent $27k. Perhaps both seller and buyer could afford to each pay $27k to their respective agents.

    Sure the buyers could pay it. But the price they pay for your home will be adjusted downward 27k to afford the fee. If buyers were willing to pay 927k for your home, they would offer that. They’re not willing, so who pays the fee is meaningless.

  134. 134
    Brian says:

    By Sid @ 117:

    I consider 2007-2008 a “once in a lifetime” kinda event. Massive firms like Lehman Brothers, Bear Stearns, AIG, WAMU, Merrill Lynch etc… failed. Maybe after 30-40 years when people have forgotten about it, a bubble forms again and a massive crash is repeated. It is too soon to predict another event of such magnitude. People don’t have that short memories.

    I might have been more inclined to believe you if the last 20 years of real estate hadn’t been so exceptional compared to the previous 100 years. Real estate price charts of the last 20 years look more like a stock index and we all know the stock market crashes a lot more often than 30-40 years, about every 8 years actually.

    I wouldn’t hedge on such long cycles anymore. Bonds and savings used to be the place to safely invest money because they gave you better returns than real estate. But bond/savings returns suck now, so people invest in real estate. There are a lot of mom & pop investors in real estate, I wouldn’t say that is comforting to a homeowner concerned about value.

  135. 135
    S-Crow says:

    RE: Blurtman @ 130 – This is very hard for people to wrap their heads around and many agents would probably disagree with my analysis:

    1 of 2

    Fees paid for value received is a topic that is brought up by clients at the closing table from time to time, normally absent the agent. Most agents do not attend closing/signings for one reason or another.

    That being said, I think that with the tools available online today an agent who thinks that they won’t show a home because of a home not offering a traditional commission could very well lose their buyers. If a buyer caught wind that the agent “representing” them was steering property due to commission splits….well, the buyers would probably move agents in a heart beat. Buyers have access to property within minutes of it being listed. They want the house. Commissions paid to agents are an afterthought. Buyers don’t say, “gee, I wonder if my agent is getting a full commission on this sale.” This is because the real estate industry has done a great job in cementing into people’s minds that it’s a Seller “expense.” Remember, buyers bring the money to the table. Buyers are in essense triggering the “mechanism” to finance the commissions paid.

    Continued….

  136. 136
    S-Crow says:

    RE: S-Crow @ 135

    2 of 2:

    Buyers could pay their agents a fee. A Seller could also do the same. However, tell me how many buyers would be able to shell out $15-20 and 40K as a stand alone closing cost? Very few in aggregate and virtually none in the mid to lower price brackets. Just because a real estate commission is reflected on a sellers Settlement Statement as an expense does not mean the source was from the seller. It’s financed and when there is no financing commissions are paid from the buyers cash. It is a blessed industry arrangement to make real estate ‘work.’ Without this arrangement real estate would obviously look much different; a topic for another discussion.

    It’s been said that 95% of marketing is pricing the home correctly for the current market conditions, period. Followed by location, features etc.

    S-Crow

  137. 137

    RE: Blurtman @ 130

    The seller doesn’t “pay” it so much as it is included in the price so that it can be financed. If the buyer pays it, it can’t be financed. The amount at its highest is included in the price for convenience and the buyer and buyer agent determine what the actual price will be.

    If lenders would allow it to be financed regardless of who paid it then they they could be split apart.

  138. 138

    [Topic: Why Seller Pays Buyer Commission.]

    By Blurtman @ 130:

    I understand that someone will need to pay the buyer’s agent, I just don’t understand why the convention is that the seller pays.

    I covered that in post 118 above from an economic/financial point of view. If you want a historical view, at least in Washington State both agents used to be deemed to represent the seller. It was a stupid system, but that’s the way it was.

  139. 139

    [Topic: Agents attending escrow signings.]

    By S-Crow @ 135:

    Most agents do not attend closing/signings for one reason or another.

    Because they’re lazy and/or don’t understand anything that’s going on. Most buyers agents also don’t attend septic inspections. “Most agents” seldom gets you to a high standard.

  140. 140
    Blurtman says:

    RE: S-Crow @ 136 – $40k at 3% would mean a price of $1.3 million. As many buyers that could afford to put down 20% or $260,000 could also pay an additional $40k, don’t you think, without having to finance the 3%.

  141. 141

    [Topic: “Non-Traditional Buyer’s Agent Fees]

    By S-Crow @ 135:

    That being said, I think that with the tools available online today an agent who thinks that they won’t show a home because of a home not offering a traditional commission could very well lose their buyers. If a buyer caught wind that the agent “representing” them was steering property due to commission splits….well, the buyers would probably move agents in a heart beat.

    I would agree with that, but it reminds me of how some people think agents will show listings with their own firm first. I’m associated with one of the biggest offices in King County, but if I tried to only show our firm’s listings I wouldn’t be able to do much business. Usually I don’t even know the firm listing a property until I drive up to it, unless maybe there’s something odd in the listing that causes me to look at the agent.

    The “non-traditional” fee though can be dealt with–if the buyer’s agent has their client sign a buyer’s agency agreement. At that point the commission paid by the seller becomes negotiable.

    But the bigger issue is how many buyer’s agents, either consciously or subconsciously didn’t show the house to their buyer clients? Or how many buyer clients learning of the situation just decide not to deal with that seller?

  142. 142

    [Topic: Seller Paying Buyer Commission]

    By Blurtman @ 140:

    RE: S-Crow @ 136 – $40k at 3% would mean a price of $1.3 million. As many buyers that could afford to put down 20% or $260,000 could also pay an additional $40k, don’t you think, without having to finance the 3%.

    I would suggest you also look at the explanation in post 133 from Brian.

    But you’re making a huge false assumption. On your $1,300,000 house with the seller paying the commission, what makes you think the buyer would pay $1,340,000? They are going to pay less if they have to pay their own agent. The only time that might work out is if the buyer doesn’t have an agent, but that opens up huge liability issues for the seller and listing agent (particularly in the area of higher priced houses where buyers also have the money to pay attorneys).

    Or look at the money down. What makes you think a buyer willing to put $260,000 down is willing to put $300,000 down instead, even assuming they can?

    Buyers take their total costs into account. The market price on condos will drop if the dues go up $100 a month. It’s not like the buyer is just going to pay $40,000 more for the house because the seller wants to pay $40,000 less in closing costs.

  143. 143
    Blurtman says:

    RE: Brian @ 133 – I understand your POV, which is that RE agent commissions inflate the price of homes by 6%. But the argument of affordability is somewhat circular, i.e., more buyers could get financed at 94% of list and so that hypothetical buyer who couldn’t afford the $27k out of pocket, might also not be able to be financed for the additional $27k.

    If the seller went the FSBO route, he could place the 3% in his/her own pocket, taking advantage of the inflated home price.

    And why is the seller paying a RE transfer tax of 1.78% on the inflated 6%? As this money goes in the agents’ pockets, shouldn’t the agents cover the tax on the inflated 6%, i.e., the seller pays the 1.78% on 94% of the sales price.

  144. 144

    [Topic: Seller Paying Buye’s Commission.]

    By Ardell DellaLoggia @ 137:

    RE: Blurtman @ 130

    The seller doesn’t “pay” it so much as it is included in the price so that it can be financed. If the buyer pays it, it can’t be financed. The amount at its highest is included in the price for convenience and the buyer and buyer agent determine what the actual price will be.

    If lenders would allow it to be financed regardless of who paid it then they they could be split apart.

    That is likely true, and it doesn’t make much sense that it is that way. Lenders will allow sellers to pay three or more percent of the buyer’s loan and closing costs. Those have to be somehow related to the house purchase, but the buyer’s commission is clearly related to the house purchase. Part of it is probably that it started with paying some of the buyer’s loan costs, which benefited the lenders, and then they allowed it to extend into other closing costs items. But expanding that to also include buyer’s agent’s commissions would be a huge jump, even though the total could be less.

  145. 145

    [Topic: Seller Paying Buyer’s Commission.]

    By Blurtman @ 143:

    RE: Brian @ 133 – I understand your POV, which is that RE agent commissions inflate the price of homes by 6%. But the argument of affordability is somewhat circular, i.e., more buyers could get financed at 94% of list and so that hypothetical buyer who couldn’t afford the $27k out of pocket, might also not be able to be financed for the additional $27k.

    . . .

    And why is the seller paying a RE transfer tax of 1.78% on the inflated 6%? As this money goes in the agents’ pockets, shouldn’t the agents cover the tax on the inflated 6%, i.e., the seller pays the 1.78% on 94% of the sales price.

    That’s not what Brian said at all. I think the difference is Brian is looking at it from the buyer’s side–they are not willing to pay the extra money. You really need to look at it from the point of view of what the buyer is willing to pay. I think that’s what you’re missing.

    As to the last point, state law makes the REET a seller expense (but liened against the buyer’s property if not paid.) But as to other costs you will sometimes see the real estate commission based on the net price if the buyer is asking for closing costs to be paid by the seller. So for example, if a buyer is offering $510,000 with the seller paying $10,000 of their costs, the commission would be based on $500,000. But for regular seller closing costs the commission is based on the gross. If it wasn’t, then the commission would probably be adjusted upward. These numbers have their own physics–for every action there is a reaction. You’re just assuming you can change one thing and there will be no other impact.

  146. 146
    Erik says:

    RE: Believeland Gutterpunk @ 107
    This is like 2000 all over again, not 2005. Credit expansion still hasn’t taken place yet. When it does, the bubble will begin.
    I know a few people that got rich investing in dirty south sound real estate. I try to limit my risk. In my opinion, you are taking a much greater risk in the dirty south sound. In the south sound you are renting to construction workers, welders, and drug addicts. Those people are much more likely to not pay rent or ruin your rental. High testosterone wants to destroy and leave, and that’s what you get in the dirty south sound.
    I visited my rental property over the water on Alki point on Friday because the tenants needed me to fix something. The place was already beautiful when I rented it, but it was stunning now that the new tenants took over. Both tenants are retired and take wonderful care of the place. They are extending their lease and will hopefully continue until I decide to sell it.
    That’s the power of renting in Seattle vs renting down in the dirty dirty. South sound renters would have probably not paid their rent and trashed the place. They may even get high and crap on the floor for no aparent reason. If you buy dirty south sound property, you are taking a big risk in my opinion. Seattle condos are virtually worry free. Plus, I love my leasing agent. She doesn’t serve the dirty south sound.

  147. 147

    RE: Blurtman @ 143

    I have seen sellers pay on “adjusted gross” vs purchase price, but that happens more when the seller is paying some of the buyer’s closing costs, so netting out the buyer agent fee and any other seller paid buyer costs is more common than netting out seller costs. But we see more compromises like that in a down market when sellers have less equity than in a hot market.

    An agreement to pay has to have a named payee to be most binding. The seller agrees to pay the Listing Brokerage the total fee for “both sides”. The Listing Company then promises to pay the brokerage who represents the buyer, given that company is an unknown at time of listing. The seller really never agrees to pay the agent for the buyer in a contract. They agree to pay their Brokerage an amount that covers all and then “the mls” is a means by which Brokerages promise to share that in exchange for lots of agents from any company showing the property.

    It all boils down to having lots of agents showing your house vs having “a buyer”. You feel kind of silly saving money if you are not in the mls and no one is showing your house. As of May 1 Zillow is removing the ability of an agent to manually upload a single listing. Not sure if or how that may affect FSBO’s on Zillow. If they owner can still do it but not agents, then the agent can just have the owner do it when they cannot.

    Not sure how that will work until the new site goes live.

    Once there is a buyer and a seller for the property it all seems a bit convoluted, but remember it all begins before the house is on market as no one is coming to show it if there is no keybox to get in and no “promise to pay” which is via the listing brokerage and not the seller.

  148. 148

    [Topic: Zillow listings]

    By Ardell DellaLoggia @ 147:

    As of May 1 Zillow is removing the ability of an agent to manually upload a single listing. Not sure if or how that may affect FSBO’s on Zillow. If they owner can still do it but not agents, then the agent can just have the owner do it when they cannot.

    Not sure how that will work until the new site goes live.

    I mentioned that a week before last in the prior thread. I don’t believe it affects FSBO sellers. My take on it was that it would likely help with (eliminate?) their issue of stale listings, and thus would be an improvement.

  149. 149

    RE: Kary L. Krismer @ 148

    I don’t see how as now I would have the seller post it as for sale and I would not be able to update the listing but would need the seller to do that. Of course Erik would let me pretend to be him as I expect most sellers will. :) Not sure what the point of this change is. Most of the “stale” listings on Zillow were never listings at all but rather homes with Trustee Notices that are not for sale and sometimes never become for sale.

  150. 150

    RE: Erik @ 146

    I am starting to see “credit expansion” as in No PMI on less than 20% down and no impounds for RE taxes and Fire Insurance except for what is due at closing on 90% LTV which is pretty much unheard of even in the loose lending years.

    I’m surprised to be seeing this. Most of the updated laws have been attacking things that weren’t the problem. So dismantling Dodd Frank may get blamed if there is another Credit Crisis, but things are happening again with Dodd Frank that will be the cause…though removing Dodd Frank will be blamed anyway.

  151. 151

    RE: Kary L. Krismer @ 144

    The more common method is to rescind the offer of compensation, have the seller pay the buyer’s closing costs in the contract and then have the buyer pay the commission with the money they would have used to pay their buyer closing costs. That was the original method on DAY 1 of Buyer Agency in most places.

    Lenders were then asked to reconsider their rules (and IRS as well) once buyers had their own representation by law, but neither would budge. So often the agent gets taxed as to what they “could have received” vs what the buyer agreed to pay.

    The industry hasn’t “fixed” this because of the lending industry and tax issues which they have no control over to change. Brokerages generally still treat buyers the same as they did during sub-agency. They still “sell houses” with very little upgraded considerations as to how to represent buyers well, other than to close them out.

  152. 152

    [Topic: Zillow}

    By Ardell DellaLoggia @ 149:

    RE: Kary L. Krismer @ 148

    Not sure what the point of this change is. Most of the “stale” listings on Zillow were never listings at all but rather homes with Trustee Notices that are not for sale and sometimes never become for sale.

    Most the stale listings were listings. Foreclosures are foreclosures, not listings. The reason they were stale is the agent would change the price, update the NWMLS, but not update Zillow. And the same when the property went pending or sold. Agents would just forget.

    There was a less severe issue where they would use a service to post to Zillow and Trulia, and that service would have a lag time. I don’t think that issue exists to the same extent with firms that automatically upload, but it wouldn’t surprise me that some of the broker sites update faster and more often.

  153. 153

    RE: Wb @ 68
    My Friend Did Too

    The last straw was when the tenant turned his rental into some kind of a chemical manufacturing enterprise….without more evidence…

    He tells me he barely broke even, after remodeling with back breaking work many times…..finally a saving grace…..bugs attacked the wood and he closed it down.

  154. 154
    Blurtman says:

    RE: Erik @ 146 – Stick it to the rabble. It’s their lot in life.

  155. 155
    Blurtman says:

    RE: Ardell DellaLoggia @ 151 – Thanks for the history, but even in the early days, it seems that the seller is still expected to pay closing costs.

    Imagine a world where a database listed assets for sale, and buyers as well as sellers could pay for input on maximizing the best deal on the asset purchase/sale.

  156. 156

    [Topic: Seller Paying Buyer’s Commission]

    By Blurtman @ 155:

    RE: Ardell DellaLoggia @ 151 – Thanks for the history, but even in the early days, it seems that the seller is still expected to pay closing costs. .

    As I mentioned earlier, in the early days the agent showing the buyers houses and writing up their offers was deemed to be the seller’s agent. Thus it made perfect sense that the seller paid them. (BTW, that meant that if you told the agent who showed you 30 homes that you were willing to pay $75,000 for a house but wanted to start at $70,000, the agent was bound by law to tell the seller that you were willing to pay $75,000, because they were the seller’s agent.)

    Maybe this will help you. The buyer determines what they are willing to pay and the seller determines what they are willing to accept. A buyer is not going to be willing to pay more in total if the seller does not pay their buyer’s commission than if they do. The buyer may not be able to pay as much if the seller doesn’t pay it.

  157. 157

    RE: Blurtman @ 155

    Some costs are seller costs and some are buyer costs. Each expected to pay their own. It is often customary to “stack” buyer costs on top of the asking price if seller paid. So it looks like the seller is paying them, but the buyer is using that method so as to finance them. Same as a seller does when including refinance costs into the new loan amount vs paying them out of pocket.

  158. 158
    Erik says:

    RE: Blurtman @ 154
    Thanks for the support. Now that I’m probably not considered poor anymore, i’m ready to attack.

    When I read your comment, I pictured a man from the gated community of Sammamish raising his fist and yelling that over the iron fence.

  159. 159
    redmondjp says:

    RE: Erik @ 158 – Good luck trying to find an iron fence in Sammamish, Erik! It’s not THAT nice of a neighborhood.

  160. 160
    Erik says:

    I live in Seattle, therefore everyone on the eastside is a yuppie. When I lived in Kirkland, I was called a yuppie. Now it’s my turn to throw stones.

  161. 161

    [Topic: Seller Paying Buyer’s Commission]

    One more thing for Blurtman to consider. The somewhat related “seller paying buyer financing costs” only exists for one reason. The reason is to increase the net price that the seller will receive for their property, but it comes at a risk that the property won’t appraise. But ignoring that risk and the slight change in closing costs, a $510,000 offer with $10,000 in closing costs is just as good for a seller as a $500,000 offer. So if agreeing to pay closing costs allows that one buyer to buy, and there is no other buyer willing pay near $500,000, paying the buyer’s closing costs increases the seller’s net recovery. The same is true of commissions.

    From the buyer’s side, the main reason for them to not want to ask for seller paid costs is they are basically financing their closing costs and paying them over the stereotypical 30 years. That same issue does not exist with real estate commissions, however, because if the buyer was in a position to pay their own agent’s commission, they could just increase their down payment and borrow less. Or they could find a rebate broker, etc. Or they could use their additional funds to make their offer more attractive to a seller using some sort of low appraisal provisions. It gives the buyer more flexibility, and that too can benefit the seller.

    Finally, this is sort of a meaningless issue, because it’s really an argument over accounting. Who is paying for the buyer’s fee per the closing statement. In reality the buyer is paying the buyer’s agent’s fee, the listing agent’s fee and all the other closing costs, because unless the seller is bringing money to the table to close, all the money is coming from the buyer. It’s just that the seller set the amount of a couple of those items.

  162. 162
    S Sounder says:

    RE: Erik @ 146

    Wow Eric. Talk about painting with a broad brush. The South Sound is a big area and there are a lot of nice spots. And for the record I havent crapped on the carpet in quite some time.

  163. 163
    WS says:

    The latest Zumper apartment rent numbers are out. It sure doesn’t feel like it out there but they have 2 bedroom apartments down 7.5% YOY in Seattle with 1 bedrooms up 1.6% YOY. Of course other data points like Zillow do not have negative numbers. We will see how it holds up through summer but its interesting the downward trend is continuing as we get well into spring. Also of note, in the top 10 most expensive markets only LA has a YOY increase in 2 bedrooms. With the huge amount of new apartments coming on line this year it will be interesting to watch.

    https://www.zumper.com/blog/2017/05/zumper-national-rent-report-may-2017/

  164. 164
    wreckingbull says:

    RE: S Sounder @ 162 – Don’t take the bait. Just like back in kindergarten, if you ignored the kid that ate paste, he would eventually stop.

  165. 165
    SeaTownDweller says:

    RE: S Sounder @ 162 – While I don’t agree with some of the Erik’s wordings in his logic, I too shared similar sentiment when deciding on the locations of the rental property purchase in the past. Money and business decision are not about emotions or pleasing anyone but the top line and bottom line and ROI. Real estate is all about locations, the more central the location the easier it is to rent out and find good tenants; the more south you go, the perceived rate of default and eviction increases per his logic.

  166. 166
    S Sounder says:

    RE: wreckingbull @ 164 – I’m not offended really. Just trying to stick up for the drug addict welder carpet stainers ;)

  167. 167
    redmondjp says:

    RE: S Sounder @ 166 – And you made it through your entire comment without even mentioning pit bulls (sniff), makes me proud!

  168. 168
    WS says:

    I am not sure how many long time landlords are on here but most will tell you its the blue collar middle class neighborhoods that are the sweet spot in cash flow/versus investment. The numbers don’t pencil very well generally on the types of houses you might want as your primary when paying retail prices for them. Of course if your goal is appreciation and your betting on that, your objectives might be different and its a given that on average there is more hand holding when you get to the real gritty neighborhoods but given the amount of people moving from the city to Burien, Renton etc I wouldn’t broadly assume that. The old 1% rule used in many markets (1% of the purchase price in rent) doesn’t work around here but you probably get closer to that in many suburbs than in the city.

  169. 169

    [Topic: Mortgage Interest Deduction]

    Here’s an article on one of Tim’s favorite topics–the Mortgage Interest Deduction, and how it is limited for “wealthy” people. I believe there are additional limitations beyond the one mentioned in the article. For those not following the news, the MID was one of the few deductions that Trump was having survive in his tax reform proposal.

    https://www.forbes.com/sites/peterjreilly/2017/05/01/george-will-and-columnist-tax-literacy/#64bc181b2130

  170. 170
    Erik says:

    RE: S Sounder @ 166
    My business model is to minimize risk and maximize profits. Pierce county does not fit that business model.

    Ray Pepper is wayyy more successful than me and he invests in South sound real estate. He got rich after the bubble popped because Pierce county didn’t seize his rentals for over 5 years. That entire time he collected rent without paying his mortgage on like 20 houses. That’s a lot of money. Then he ran to the auction and paid cash for houses from his rental income. Genius!

  171. 171
    justme says:

    RE: WS @ 163

    Rents are down? That’s impossible. Seattle is PRIME!

    The world is powerless against the unmitigated genius of Jeff Bezo$. His accounting genius is second to none. Well, actually, it may be second to his reality distortion powers. Behold the awesomeness of Bezo$.

  172. 172

    [Topic: Ray Pepper]

    By Erik @ 170:

    Ray Pepper is wayyy more successful than me and he invests in South sound real estate. He got rich after the bubble popped because Pierce county didn’t seize his rentals for over 5 years. That entire time he collected rent without paying his mortgage on like 20 houses. That’s a lot of money. Then he ran to the auction and paid cash for houses from his rental income. Genius!

    That’s also likely a crime if that’s what he intended to do from the get go. It probably wasn’t his original intent on the house that was recently foreclosed. Instead he bought the house at the wrong time and was unsuccessful as an agent selling the house.

    But ignoring that, what you describe is hardly a good business structure. Given the Offer in Compromise” it’s likely that Ray needed to do that to have funds to live on. Either that or he likely lied to the IRS about his assets when doing the Offer in Compromise. But it also connects into needing to do the Offer in Compromise in the first place because he would have had a lot of income without a corresponding interest expense deduction. And also the foreclosures themselves can have adverse tax consequences too. So it’s hardly a genius business practice by any means (even ignoring the fact that he disclosed many of those questionable practices on the Internet using his real name).

    You really need to be much less gullible around confidence men. Given what you’ve disclosed about yourself here you are hardly anonymous, and you have disclosed you are gullible, thereby making yourself a target.

  173. 173

    RE: Erik @ 160
    Rich Elite in Tuxedos Complaining Open Border”Victim” Status

    A victim of what? An extremely lucky life?

    Air head Yuppies…Yikes!

  174. 174
    Erik says:

    RE: Kary L. Krismer @ 172
    I don’t think Mr. Peppers is a liar if that’s what you are suggesting. Smart real estate people turn a negative into a positive like Mr. Peppers did. Donald Trump did similar stuff by declaring bankruptcy when his assets went belly up. It’s all a big shell game. Some people hide the fact that they even own the property. All this deception has a name, it’s called asset protection. It seems unfair, but if those are the rules, I need to know them so I can play the same game.

    Tim’s posts about Washington state being non-judicial was a real eye opener. In Washington state I can buy a property and stop paying my mortgage for a year minimum and it’s totally legal as long as my intent was not to do that.

  175. 175

    [Topic Ray Pepper/Privacy]

    RE: Erik @ 174 – I’m not saying Ray is a liar at all (other than maybe giving the impression that he’s somehow gotten rich). And what Trump did is nothing at all like what Ray might have done.

    But the second point was for your own protection. You’ve given out enough information on this site over the 3-4 years that you’ve been here that virtually anyone should be able to determine your last name and the two properties you’ve bought in less than an hour. Given how you’ve gushed over what Ray has done you would be a very attractive target for a confidence man. You really need to watch out when people contact you with business proposals/ideas. Their running into might not be as accidental as it may seem. They might have been seeking you out.

  176. 176
    Erik says:

    RE: Kary L. Krismer @ 175
    Okay, thanks for the advice. I like to think I’m not a sucker, but that’s what I sucker would say.

  177. 177

    RE: Erik @ 176 – Exactly, and some cons are very clever. There’s even a scam that has been going on for years targeting attorneys (and a few others too). This one since at least 2010.

    http://www.wsba.org/~/media/Files/Licensing_Lawyer%20Conduct/IOLTA/checkfraudscamsmay2010barnews.ashx

  178. 178
    SeaTownDweller says:

    RE: Kary L. Krismer @ 177 – That’s interesting, I thought that Lawyers are the professions that are least likely to be scammed, given that they see all the ugly things day in and out and can just come at the scammers with actual knowledge of the Law, but perhaps it’s when it’s least expected.

  179. 179

    [Topic: Fraudulent schemes]

    RE: SeaTownDweller @ 178 – It’s actually a brilliant scheme because most lawyers are conditioned to handle trust funds a certain way under the Rules of Professional Responsibility (or whatever that’s called now). So they don’t think about the rules under the Uniform Commercial Code, which give bank account holders the right to contest charges after the check has cleared, as well as the general rule of thumb that whoever deals with a forger loses. All they’re thinking about is that if they don’t act promptly a bar complaint might be filed against them.

    This comes up in earnest money real estate transactions too, where a buyer will make a large deposit of funds into escrow, then the deal will fall apart and the buyer wants their earnest money back.

  180. 180
    justme says:

    Erik is the Forrest Gump of Seattle real estate. He likes to pretend that he is naive, but in reality he is just a scheming richie-rich wannabe with no conscience. Either that, or he is is just making fun of all of you by making up his golly-gee-whiz evil-but-naive persona and yanking all of your chains for fun. And is that a real photo? I guess Ardell would know, unless she is in on the joke, too. Either way, Erik is a person that likes laying it on pretty thick.

    It’s all fun and games until every employee and taxpayer and all their families get hurt, like we all have since 2007.

  181. 181

    RE: justme @ 180

    Yes…that is his real photo. I think I’m the only one here who has met him. He’s a very handsome, young man.

  182. 182
    Kmac says:

    I just can’t help but think that Erik is the alter ego of another poster here….

  183. 183
    SeaTownDweller says:

    RE: justme @ 180 – Forrest Gump never pretend to be naive, or at least I didn’t read that haha. But I like to think that we are all interested in knowing different angles of this real estate ride given the past cycles, and those angles come from investors, RE agents, perpetual bull/bear, newbies, etc. As long as it makes sense with numbers to back up, it’s great learning. Besides personality differences, differences in optimism may be attributed to some getting in early and profiting more than others. One of my good friends, who is CFA cert and pretty smart all around, has continued to claim that the real estate price will correct soon since late 2013 (he sold his place in 2013). While it has been fun to watch the numbers contradict his claims, I can’t help to think that if in retrospect had he not dumped his place, he would sound much more positive about the market.

  184. 184

    [Topic Erik]

    By Ardell DellaLoggia @ 181:

    Yes…that is his real photo.

    When he started using the term yuppie I’d assumed that was a very old photo and that he was well over 50. Not a word I’ve heard a lot lately.

  185. 185
    Benvolio says:

    Erik is a cross between Barney Fife and Keyser Soze.

  186. 186
    Erik says:

    RE: Kary L. Krismer @ 184
    Hahaha. That photo was taken about 4 months ago for the org charts when I took a leadership position.

  187. 187
    Erik says:

    RE: Ardell DellaLoggia @ 181
    Awe shucks. Thanks Ardell.

  188. 188
    Harrison Lee says:

    RE: softwarengineer @ 8

    You and your Kansas train of thoughts. I lived there for 5 years and it was absolutely horrible. Seems like you are out of touch with Seattle housing and yet you still comment like you live here.

  189. 189
    Mark says:

    Is occupancy fraud a big deal? I know someone that is doing it. What should I do?

  190. 190
    Erik says:

    RE: SeaTownDweller @ 183
    Maybe your friend isn’t as sharp as you think? This bubble has not done anything surprising. It’s a typical bubble. At this super low inventory and no major credit expansion, we can be fairly certain the bubbe Isn’t about to pop.

  191. 191
    Erik says:

    RE: justme @ 180
    I don’t really understand your comment. I have been called Forrest Gump in my career too. Success can be defined as moving from failure to failure with the same enthusiasm. Maybe that’s where the Forrest Gump thing comes from, cause failure doesn’t slow me down.

  192. 192
    Erik says:

    RE: Harrison Lee @ 188
    SWE bought a house for his daughter in Kansas. SWE lives in the puget sound.

  193. 193
    SeaTownDweller says:

    RE: Erik @ 189 – it’s possible that he isn’t that sharp, although I tend to give people with full CFA cert certain benefit of doubt. The typical bubble and credit expansion causing the burst, while sensible, is based on one article, so perhaps not too many have read it, unless this is some idea that comes up frequently in WSJ n Bloomberg?

  194. 194
    Erik says:

    RE: SeaTownDweller @ 192
    Not from articles only. “The Housing Boom an Bust” by Thomas Sowell is my favorite. Books by Robert Schiller and another guy are pretty famous and say the same thing Thomas Sowell says indirectly. Read the book I noted, it’s not that long and is an easy read. He gets to the point. We keep guessing when the information is right there?

  195. 195
    Saffy The Pook says:

    By Kary L. Krismer @ 175:

    [Topic Ray Pepper/Privacy]

    RE: Erik @ 174 – I’m not saying Ray is a liar at all (other than maybe giving the impression that he’s somehow gotten rich). And what Trump did is nothing at all like what Ray might have done.

    But the second point was for your own protection. You’ve given out enough information on this site over the 3-4 years that you’ve been here that virtually anyone should be able to determine your last name and the two properties you’ve bought in less than an hour. Given how you’ve gushed over what Ray has done you would be a very attractive target for a confidence man. You really need to watch out when people contact you with business proposals/ideas. Their running into might not be as accidental as it may seem. They might have been seeking you out.

    There’s enough information on this thread alone to positively identify Eric. It took me 5 minutes.

  196. 196
    Erik says:

    RE: Saffy The Pook @ 194
    I’m not hiding. If someone wants to meet, set up a time and a place.

  197. 197
    Saffy The Pook says:

    I would, but I’m not a con man.

  198. 198
    Erik says:

    RE: Saffy The Pook @ 197
    I’d like to meet up with other people interested in real estate. The people on this site need to get out from behind their computers and see some actual daylight.

  199. 199
    GoHawks says:

    https://www.geekwire.com/2017/redfin-report-tracks-cities-people-want-flee-bay-area-want-stay-seattle/

    This thing continues until we are either no longer the “cheaper” option to the Bay Area or WWIII breaks out……

  200. 200

    [Topic: Privacy]

    By Saffy The Pook @ 195:

    There’s enough information on this thread alone to positively identify Eric. It took me 5 minutes.

    To be clear, I was talking about using tools available to anyone.

    Which gets me to another point, or actually a question. A number of listings, particularly the high end listings, will have the seller as “undisclosed.” I have to wonder what the point of that is. For agents the name of the owner is just a click away, and also the better agents will include a copy of the title report as an attached document.

    Are there some public broker sites or sites like Zillow which show the owner name information from a listing?

  201. 201

    RE: Kary L. Krismer @ 200

    What surprises me more, and I saw it last night when “winning” in multiple offers on one of those, is that agents will let the “autofil” feature put “undisclosed” as the seller on the offer-contract. Given no changes needed to accept is part of the basis for “winning” in many cases, I’m surprised agents submit offers like that. I only know because I see the “competing” offer.

    I also see many where the uploaded disclosures pre-signed by the seller still have all of the buyer and date info as blank. Removing all contingencies and putting a non-refundable Earnest Money…and putting seller as “undisclosed” and leaving blank info seems counterintuitive. But saw that latter part both last week and this week when winning against non-refundable Earnest Money offers even though I don’t do that. Non-refundable Earnest Money is apparently not as impressive as people think it is. Not worth the risk. I think those have more liability for both parties than the inspection issues you like to “chimp out” about. :) I just learned that new term here…and I like it.

  202. 202

    [Topic: Bubble]

    By Erik @ 190:

    RE: SeaTownDweller @ 183
    Maybe your friend isn’t as sharp as you think? This bubble has not done anything surprising. It’s a typical bubble. At this super low inventory and no major credit expansion, we can be fairly certain the bubbe Isn’t about to pop.

    I predict the bubble discussion will become dominant here when the NWMLS releases its April stats.

  203. 203

    [Topic: Undisclosed sellers, Non-Refundable Earnest Money–Racist Terms]

    By Ardell DellaLoggia @ 201:

    I also see many where the uploaded disclosures pre-signed by the seller still have all of the buyer and date info as blank. Removing all contingencies and putting a non-refundable Earnest Money…and putting seller as “undisclosed” and leaving blank info seems counterintuitive. But saw that latter part both last week and this week when winning against non-refundable Earnest Money offers even though I don’t do that. Non-refundable Earnest Money is apparently not as impressive as people think it is. Not worth the risk. I think those have more liability for both parties than the inspection issues you like to [phrase omitted] about. :) I just learned that new term here…and I like it.

    First, I can only assume you didn’t look up what that phrase means! And didn’t notice that Macro Investor was called out for being racist for using the term (and hasn’t appeared here since.)

    Second, I think auto-fill pulls from that data from the listing field, and I’m not sure you can change that. But per Form 21, paragraph S, you can change the seller’s name without creating a counteroffer situation. So it’s not that big of a deal, but my question was more why? If you really want to keep ownership of real property private it takes some work, and of the ones I’ve looked at they haven’t done any of that.

    Third, I have this theory (or concern) I haven’t fully researched that by making the earnest money non-refundable and delivering it to the seller that you might blow up the forfeiture of earnest money choice on the purchase and sale agreement. It’s not something I would do for that and other reasons, but any such clause does need to have provisions about what happens in the event of a seller breach. And it’s yet another thing that makes me really question where agents are getting their ideas. Agents really need to learn that just because they hear of something new it doesn’t mean it’s a good thing to do.

  204. 204
    ess says:

    By GoHawks @ 199:

    https://www.geekwire.com/2017/redfin-report-tracks-cities-people-want-flee-bay-area-want-stay-seattle/

    This thing continues until we are either no longer the “cheaper” option to the Bay Area or WWIII breaks out……

    Once again I participated in activities with some out of town guests that indicate why so many people want to stay in Seattle.

    While there are many wonderful viewpoints in Seattle, one of my favorite is that of downtown, Capitol and Queen Anne Hill(s) from Gaswork parks. While the (over) construction is readily apparent from that vantage point that has transpired over the 40 plus years of my initial arrival here – Seattle remains a beautiful city.

    While Seattle is getting expensive, other major west coast cities are equally or more so. Recently there was a report that Los Angeles is once again experiencing housing shortages, multiple bidding scenarios and rising prices. And LA for the most part is as expensive, if not more, than Seattle.

  205. 205
    WS says:

    By Erik @ 198:

    RE: Saffy The Pook @ 197
    I’d like to meet up with other people interested in real estate. The people on this site need to get out from behind their computers and see some actual daylight.

    Are you active in your local landlord association. If not it can be a great way to pick up properties from word of mouth when landlords are just tired of the biz and want to get out. For landlord issues I really like the board on mrlandlord.com as well. A lot of knowledge on there from landlords that have done it for a long time and own 100’s of properties. That said, if your not into the actual business of landlording and just into picking the perfect time to sell you might get less out of the site.

  206. 206

    RE: Kary L. Krismer @ 203

    Really? Why would you not just type in the sellers names in the first place after the autofil puts undisclosed? It’s not like we don’t know who the sellers are. Relying on Paragraph S.??? Too funny.

  207. 207

    [Topic: Seller’s name not accurate]

    By Ardell DellaLoggia @ 206:

    Really? Why would you not just type in the sellers names in the first place after the autofil puts undisclosed? It’s not like we don’t know who the sellers are. Relying on Paragraph S.??? Too funny.

    I was dealing with the worst case scenario where the buyer’s agent doesn’t change it. Most agents probably would change “undisclosed” but how many change it when it just has a last name? And even when it is changed by the buyer’s agent, it’s possible they’ll get it wrong. Maybe someone died or divorced and remarried. I’m just saying that having the forms auto-fill to something incorrect isn’t that big of a deal. It’s not a reason to not use “undisclosed.” But I still don’t know the reason some sellers want it undisclosed.

  208. 208
    Deerhawke says:

    Kary, you say ” I predict the bubble discussion will become dominant here when the NWMLS releases its April stats.” Why? Anything out of the ordinary you are seeing in the initial stats?

  209. 209

    By Kary L. Krismer @ 203:

    Second, I think auto-fill pulls from that data from the listing field, and I’m not sure you can change that.

    I now see why Ardell thought I said something different. I really need to quit using the word “you” because I use it way too much. Usually the problem is more it makes the post way too personal, as if I’m accusing someone of something. Here it was just ambiguous. In that sentence “you” was referring to a listing agent. I don’t think that a listing agent can have the seller be “undisclosed” but have the autofill term be the seller’s real name.

    BTW, I’ve even started to see some bankruptcy listings use undisclosed. Very unlikely the agent would get the name right in that situation.

  210. 210

    RE: Deerhawke @ 208 – Of course, but let’s wait and see. Late reported sales could change things.

  211. 211

    RE: Kary L. Krismer @ 209

    Thank you and yes on the “you”. Usually I check the names I have from public records against the names on the supplemental docs like Form 17 and 22J and 22K. I’ve never seen a Listing Agent repeat the last name only or “undisclosed” over to the supplemental docs. Every agent operates a little differently and usually “winning” in multiple offers has more to do with how the Listing Agent likes things done vs how you might do it if you were the listing agent. I have never had a seller ask for “undisclosed”. Seems a simple discussion as to the pros and cons of that would result in fewer of them, but for some reason I have seen many more recently and not sure why that is. It’s pretty much the same discussion as with sellers who don’t want I sign I would think.

  212. 212

    [Topic: Privacy]

    By Ardell DellaLoggia @ 211:

    I have never had a seller ask for “undisclosed”. Seems a simple discussion as to the pros and cons of that would result in fewer of them, but for some reason I have seen many more recently and not sure why that is. It’s pretty much the same discussion as with sellers who don’t want I sign I would think.

    I’ve never had a seller ask for “undisclosed” either. And I would agree it’s “pretty much” the same discussion as with signs, except that for signs I can see at least a couple of “pros” to balance against the “cons.”

    As to the attached docs, I’ve never looked at them on an undisclosed listing, that I recall, but I have seen them filled in with just the last name.

  213. 213

    RE: Believeland Gutterpunk @ 1
    07

    Wait Until You Retire on a Fixed Income [If You ever Can With That Huge Seattle Mortgage Noose Around your Neck Beyond Retirement Age]

    The property tax, maintenance/utilities on oversized glueboard new homes, family members becoming life long tenants paying little or no rent, license tabs’ increases for useless transportation projects, etc, etc…sounds like bankruptcy for a lot of seasoned Seattle folks depending on dinky “fixed” incomes…

    Its probably too late for many X-Gens in Seattle to start saving for retirement now with MASSIVE mortgage payments….work and sit in stressful traffic congestion until it kills ya off early….like the song, ya owe “your soul to the government toll”.

  214. 214
    Erik says:

    RE: Kary L. Krismer @ 202
    I just got an appraisal back yesterday on that rental in west Seattle. Wayyyy higher than I expected. Something funny is happening here in Seattle. I’m grabbing all the property I can. Hard to lose here in Seattle right now.

  215. 215
    SeaTownDweller says:

    RE: softwarengineer @ 213 – Boy that sounded real pessimistic, I wonder what brought out all those thoughts. There are always opportunities to make money elsewhere if local real estate isn’t sensible, as long as you collect profit not too late and stay liquid, which is mostly why I’m reading all the numbers and comments in this blog. If this place does turn into the next SF and all the millennials end up neck deep with mortgage payments/student loan payments, and the liberal Gov continues to royally screw with middle class with all the levies from over-budgeted/massively delayed projects, then yes let’s cash out when the average price per sq ft goes to over 1k, because maybe at 65, our risk appetite won’t be so big anymore. But hey, I wouldn’t say that I didn’t enjoy the ride when I retire without owning any property anymore. Rent a place in a different country every year and do some dividend/annuity/treasury bond play to keep up with cash flow. Life doesn’t seem so bad.

  216. 216
    SeaTownDweller says:

    RE: Erik @ 214 – May I ask why you didn’t go all in several years back? Considering the strong indication of the cycle, there shouldn’t be much risk in doing so back 3-5 years ago. Also what is your view on equity market that made you more inclined to invest in real estate?

  217. 217
    Dustin says:

    RE: Erik @ 214

    Something funny is happening here in Seattle.

    You said it yourself. I suspect you’re not the only one eager to invest right now, but a single publicized scenario of one buyer getting in over their head with a difficult property (maybe they waived their inspection rights!) could do a lot to diminish the demand driving recent price increases. A number of trends are already emerging that could shift the balance of the market: political (changes in public sentiment), financial (the economy, interest rates). Affordability in the Seattle area is lower than ever before, while lots of new housing developments are in progress. This isn’t to say investors shouldn’t be expanding their portfolios, but I do think they should be cautious. As supply increases, it will get harder to flip a property for profit, or find good renters willing to pay a high price. Buyers who bit off as much as they could chew in a seller’s market without thinking about risk will be hit the hardest.

  218. 218
    WS says:

    By Dustin @ 217:

    RE: Erik @ 214

    Something funny is happening here in Seattle.

    You said it yourself. I suspect you’re not the only one eager to invest right now, but a single publicized scenario of one buyer getting in over their head with a difficult property (maybe they waived their inspection rights!) could do a lot to diminish the demand driving recent price increases. A number of trends are already emerging that could shift the balance of the market: political (changes in public sentiment), financial (the economy, interest rates). Affordability in the Seattle area is lower than ever before, while lots of new housing developments are in progress. This isn’t to say investors shouldn’t be expanding their portfolios, but I do think they should be cautious. As supply increases, it will get harder to flip a property for profit, or find good renters willing to pay a high price. Buyers who bit off as much as they could chew in a seller’s market without thinking about risk will be hit the hardest.

    Exactly. This kind of sentiment (you can do no wrong) scares me to no end. The big money was buying houses back in 2011-2013, not so much now. The chances of the next 4 years being like the last 4 are very low and with lots of housing units on the way (23,000 apt units coming on line by the end of 2018 in the city alone) a reasonable person could project rents leveling/dropping which can impact the whole market. Of course if the properties you buy pencil out and cash flow from renting them out and you are ok with holding them long term then your good to go. But from what I see most $500k properties don’t pencil in that sense very well at all. You also gotta be really careful with condos at this point with the huge run up they have had (they tend to go up the most and fall the most, much less stable value wise).

  219. 219
    Sea says:

    By Dustin @ 217:

    RE: Erik @ 214

    Something funny is happening here in Seattle.

    You said it yourself. I suspect you’re not the only one eager to invest right now, but a single publicized scenario of one buyer getting in over their head with a difficult property (maybe they waived their inspection rights!) could do a lot to diminish the demand driving recent price increases. A number of trends are already emerging that could shift the balance of the market: political (changes in public sentiment), financial (the economy, interest rates). Affordability in the Seattle area is lower than ever before, while lots of new housing developments are in progress. This isn’t to say investors shouldn’t be expanding their portfolios, but I do think they should be cautious. As supply increases, it will get harder to flip a property for profit, or find good renters willing to pay a high price. Buyers who bit off as much as they could chew in a seller’s market without thinking about risk will be hit the hardest.

    Exactly. This kind of sentiment (you can do no wrong) scares me to no end. The big money was buying houses back in 2011-2013, not so much now. The chances of the next 4 years being like the last 4 are very low and with lots of housing units on the way (23,000 apt units coming on line by the end of 2018 in the city alone) a reasonable person could project rents leveling/dropping which can impact the whole market. Of course if the properties you buy pencil out and cash flow from renting them out and you are ok with holding them long term then your good to go. But from what I see most $500k properties don’t pencil in that sense very well at all. You also gotta be really careful with condos at this point with the huge run up they have had (they tend to go up the most and fall the most, much less stable value wise).

  220. 220
    justme says:

    RE: Erik @ 214

    >>Something funny is happening here in Seattle. I’m grabbing all the property I can. Hard to lose here in Seattle right now.

    Real estate is like a box of chocolates, Erik. You never know what you’re gonna get.

  221. 221
    SeaTownDweller says:

    RE: Sea @ 218 – I used to be more jittery in reacting to these big money this and fed rate hike that kind of news, I thought that China crack down would kill the foreign investment in real estate, and the headwinds faced by the rest of the world last two years would had caught on to the US real estate market, now I am more at peace with it as it is relatively just noise in the big picture. It is possible that pricing correct here and there, but if you react to a temporary correction (by selling) and think that it will just continue to drop (not buying), then you end up missing out of the run, and there is absolutely nothing run with staying with the run and profit. I do believe that bubble will form and burst, but timing the real estate market to me is even more difficult in timing the equity market. It makes more sense with the credit expansion theory so I would be more inclined to watch for that, but of course if we get a nuclear war with North Korea tomorrow, I would be wrong, but that has nothing to do with the noise.

  222. 222
    js says:

    By Dustin @ 217:

    …Affordability in the Seattle area is lower than ever before, while lots of new housing developments are in progress. …

    Agreed with most of your post, but this statement isn’t true. Yet :)

    https://seattlebubble.com/blog/2017/04/18/affordability-index-falls-early-2005-levels/

  223. 223
    wreckingbull says:

    By Erik @ 214:

    RE: Kary L. Krismer @ 202 – Something funny is happening here in Seattle. I’m grabbing all the property I can. Hard to lose here in Seattle right now.

    Statements like this, coming from individuals like this, could very well be the contrarian signal some of you have been waiting for.

  224. 224

    [Topic: Increasing office space.]

    Maybe the data people need to be tracking isn’t even residential. This is just a move from one location to another, but as more and more office space is added if there isn’t an increase in vacancy rates, then that means more and more employees need more and more places to live.

    http://www.seattletimes.com/business/technology/tech-company-f5-will-lease-all-downtowns-newest-office-tower/

  225. 225
    Erik says:

    RE: wreckingbull @ 222
    Got me wreckingbull. Good dig.

  226. 226
    Erik says:

    RE: justme @ 219
    Right. I’m betting prices continue upward for 7 years.

  227. 227
    Erik says:

    RE: SeaTownDweller @ 216
    I just wasn’t ready. In short, my employment wasn’t steady enough, I didn’t have financial backing, not enough certainty in the market. Buy me coffee at Starbucks in Juanita and I’ll give you all the details if you are interested.

    My path has been a rocky one, but I’m finally in a place where I think things are really starting to fit together. I know how to buy real estate for a discount and I’m comfortable with the process. Now I’m just running a process. I think in 2 more years it will be too late to buy, so I’m trying to purchase what I can now.

  228. 228
    Erik says:

    RE: WS @ 205
    Thanks for the advice, I’ll check it out. I’ve been buying at the King County auction, but this sounds like another good source.

  229. 229
    Erik says:

    RE: Dustin @ 217
    I hear ya. Logically that makes total sense. Bubbles don’t follow the logical rules of supply and demand, that’s why they are called bubbles. I think we will be in another bubble in a couple years and I want to be holding real estate when it happens. Credit expansion = irrational exuberance = higher prices. When that happens, I want to dump my properties and have some cash this time to buy new properties at low prices. I’m sure I won’t hit the top of the market perfectly, but hopefully I’ll be close.

    Just think, if you had $500k cash and it was 2012 again. Knowing what I know now, I think I could make a killing and retire early. I wasn’t ready last time. I want to be ready for it this time. I know how to get the real estate at the auction. Now I just need the money in hand when it happens. I could have 40 rentals in Seattle that cash flow.

  230. 230
    Erik says:

    RE: Sea @ 218
    It’s on my mind, but we will have to wait and see. I want to sell the condos when they double in price from what I bought them at. You gotta be in the game to score. The timing of when I sell them will be crucial. I will sell the most risky condos first. Then if all goes right, I’ll have a few hundred grand to weather another collapse if it happens early. If I hit it just right, I can sell everything else and have enough money to quit working and relax.

  231. 231
    Macro Investor says:

    By wreckingbull @ 222:

    By Erik @ 214:

    RE: Kary L. Krismer @ 202 – Something funny is happening here in Seattle. I’m grabbing all the property I can. Hard to lose here in Seattle right now.

    Statements like this, coming from individuals like this, could very well be the contrarian signal some of you have been waiting for.

    He’s having fun with you guys. He doesn’t believe in the iron clad 18-year cycle. I doubt he’s cash flow positive on these condos. Something Ray wrote once stuck in my mind. Many condos wouldn’t be worth taking for free because the HOAs are so high. With interest, taxes and HOA you can’t rent it for enough to make money.

    Eric’s scheme is to have lots of rentals that don’t have to make money, because he’s going to stop making payments and just wait for the foreclosure.

  232. 232
    Erik says:

    RE: Macro Investor @ 230
    True that I don’t believe with certainty that the market will crash in 18 years. It’s my best guess, so I’m going with that. True that I’m not cash flow positive. Condos can cash flow, I just need to hold them a few more years.

    My plan isn’t to foreclose. I think the market will continue to appreciate and I can sell or refinance one of the condos, which will more than offset my losses on the other condos. This game is what caused people to foreclose last time, but I think I can time it right and be okay. If I can get 2 more strong years, I’ll sell or refinance one of the condos and have plenty of money until I sell in 2024 when I sell the rest.

  233. 233
    GoHawks says:

    Tim, is it possible to up a poll question? Where do we think the Seattle/Puget Sound market will be in 2-3 years. It would be interesting to see the bull/bear ratio.

  234. 234
    Brian says:

    Do we really have a recent undersupply of housing units?

    King county (higher persons/unit means lower housing supply)
    1980: 1270k people, 525k housing units = 2.42 persons/unit
    1993: 1588k people, 684k housing units = 2.32 persons/unit
    2001: 1758k people, 753k housing units = 2.33 persons/unit
    2009: 1909k people, 832k housing units = 2.29 persons/unit
    2016: 2105k people, 907k housing units = 2.32 persons/unit
    http://www.ofm.wa.gov/pop/april1/

    Appears we’ve maintained the same ratio for many years.

  235. 235

    [Topic: Income Taxes/Depreciation.]

    By Erik @ 232:

    RE: Macro Investor @ 230
    True that I don’t believe with certainty that the market will crash in 18 years. It’s my best guess, so I’m going with that. True that I’m not cash flow positive. Condos can cash flow, I just need to hold them a few more years.

    Don’t forget to take the depreciation allowance on your condos. That will save you money and also get you to cash flow faster (although not on a month to month basis).

    From memory (consult your tax adviser) if you don’t take the depreciation the IRS can ding you when you sell by reducing your basis to the amount it should have been and then “recapturing” the depreciation you didn’t take at ordinary income rates. You can amend returns back three years, and thus limit some of that damage, but the rest would be a bad situation. You’d have paid more taxes in the early years than you should have and then be paying taxes as if you’d been paying the lower amount those years.

  236. 236
    Brian says:

    Surprisingly, Seattle’s housing supply situation is even better than the rest of King county

    Seattle (higher persons/unit means lower housing supply)
    1980: 498k people, 230k housing units = 2.17 persons/unit
    1993: 428k people, 257k housing units = 2.05 persons/unit
    2001: 568k people, 274k housing units = 2.07 persons/unit
    2009: 602k people, 302k housing units = 1.99 persons/unit
    2016: 687k people, 340k housing units = 2.02 persons/unit
    http://www.ofm.wa.gov/pop/april1/

    Starting to seem like under supply is a myth.

  237. 237
    Erik says:

    RE: Kary L. Krismer @ 235
    I contacted a CPA that said he would help me out this year. I’m not interested in doing this work myself since I really don’t know what I’m doing. Maybe I can save the money later after I figure out how to do these taxes? For now, I’m going to get the CPA to do it and look over his shoulder.

  238. 238
    I'm just here so I won't get Fined says:

    Kary does this look like a situation where the agent may have gone too low on the asking price? There is a house directly across the street that is significantly smaller that I assume (given that it hasn’t closed yet) will sell for over $630k given how many people I saw in and out of it a couple weeks ago. This is my hood so I have a vested interest in what these homes sell for.

    https://www.redfin.com/WA/Shoreline/14732-Wallingford-Ave-N-98133/home/80988

  239. 239

    RE: Harrison Lee @ 188
    Wichita Is Not Kansas City

    Its dry flat farmland with little lakes or rivers….Kansas City is a at a connection point of several big rivers and is green with lots of Oak Trees.

    Seattle has been mowed down with asphalt and strip malls. Dinky lots. Congested Streets. And idiot local politicians that won’t admit it…..I’ve lived in the Seattle area all my live. It was once nice, its treeless, crowded and horrifying now….the prices of everything are far higher than Kansas City.

    Use your brains with street smarts, I will admit Seattle is a bit better if you don’t work and don’t need to use the useless clogged freeways…in Kansas City the freeways are always 1/2 empty [or less] traveling at 70 mph…no comparison.

  240. 240

    [Topic: Taxes.]RE: Erik @ 237

    That’s rather alarming because: 1. We’re past April 15; and 2. You owned the other condo prior to last year. Seeming the CPA is going to have to amend one or more prior years of returns. If you haven’t owned the first condo for more than three years you’re probably okay, but time limits might be running. You should act ASAP.

  241. 241

    RE: Brian @ 236
    The Average Seattle Home Has 1.2 Workers Per Household

    Home Ownership in Seattle is mainly Singles, not Couples or families.

  242. 242

    RE: Kary L. Krismer @ 239
    Yes Kary

    The present high federal tax rates, even with a retirement fixed income like me, were almost as bad as working…my tax bill didn’t hardly shrink at all for 2016.

    Put that in your retirement pipe planning and smoke it.

  243. 243
    Chris says:

    Softwarengineer, for this forum, is like the cranky old man sitting on his porch yelling, “Get off my lawn!” – and I enjoy it immensely. Keep it coming, sir.

  244. 244
    ess says:

    By softwarengineer @ 238:

    RE: Harrison Lee @ 188

    Seattle has been mowed down with asphalt and strip malls. Dinky lots. Congested Streets. And idiot local politicians that won’t admit it…..I’ve lived in the Seattle area all my live. It was once nice, its treeless, crowded and horrifying now….the prices of everything are far higher than Kansas City.

    ——————————————————————————————————–

    Speaking of congested and treeless – Vancouver BC and some of the adjoining towns. Houses, townhouses and condos piled on top of each other, built right out to the sidewalk, with very little vegetation. And traffic? Makes Seattle streets and freeways look empty. Also very expensive – but yet they still come……

  245. 245
    justme says:

    RE: Brian @ 236

    Thanks for posting that, Brian. And thanks for getting this thread back on track from the usual bubbler prattle and happy-talk. There is indeed no evidence there is any signficant undersupply of housing in Seattle. There is however an oversupply of salivating speculators and pompous petit rentiers.

    I discussed some of the same data back in January, as can be seen here:

    https://seattlebubble.com/blog/2017/01/12/huge-2017-apartment-boom-soften-housing-market/comment-page-1/#comment-260133

  246. 246
    Erik says:

    RE: Kary L. Krismer @ 239
    I’m working on it. I need to get a bank account for each property first. This is all new to me, so I’m working through it.

  247. 247
    Doug says:

    RE: Brian @ 236 – What is a housing unit? Is it a SFH?

  248. 248
    justme says:

    RE: Doug @ 245

    TheTim has previously answered this, and I quote:

    From the Census definition:

    A household includes all the persons who occupy a housing unit as
    their usual place of residence. A housing unit is a house, an
    apartment, a mobile home, a group of rooms, or a single room that is
    occupied (or if vacant, is intended for occupancy) as separate
    living quarters. Separate living quarters are those in which the
    occupants live and eat separately from any other persons in the
    building and which have direct access from outside the building or
    through a common hall. The occupants may be a single family, one
    person living alone, two or more families living together, or any
    other group of related or unrelated persons who share living
    arrangements.

  249. 249

    [Topic: Income Taxes]

    By Erik @ 244:

    RE: Kary L. Krismer @ 239
    I’m working on it. I need to get a bank account for each property first. This is all new to me, so I’m working through it.

    You probably don’t need a bank account for each property unless they are in separate entities. You can just use Quicken to categorize the expense for each property (setting up identical categories for each property). If they are separate, not sure how you fix that at this time. Again consult a tax adviser.

    You probably do need a separate account for your tenant security deposits, but again just one if the units are not owned by separate entities.

  250. 250

    [Topic: Statistics]RE: justme @ 243

    British Prime Minister Benjamin Disraeli: “There are three kinds of lies: lies, damned lies, and statistics.”

    Also, reminds me a bit of the three blind men and an elephant story: https://en.wikipedia.org/wiki/Blind_men_and_an_elephant

    Seriously, are you really suggesting that you can just ignore specific statistics that are published monthly and instead just rely on general statistics that apply to many different types of housing? It would be like saying there’s no shortage of Madrone trees in King County by pointing to a survey of how many trees are in King County.

    We have a historical shortage of active listings and rents have been climbing through the roof, but no, there’s not a shortage of housing units. It’s all made up! /sarc

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